Congressional Commission to investigate Odebrecht bribery scandal

9 Janaury 2017

On 4 January, a congressional commission with full investigative powers was created to deal with the accusations of illegal payments to government officials by Odebrecht, the Brazilian construction company. These relate to infrastructure contracts obtained from the Peruvian government from at least 2005 onwards. The information came to light as part of the wider investigation into the so-called ‘Lava Jato’ (‘Car Wash’) scandal, which burst on the scene in Brazil in 2015 and which has led to many of the company’s top managers and leading Brazilian politicians ending up in jail.

Congressman Víctor Albrecht, from Keiko Fujimori’s Fuerza Popular (FP) has been selected to lead the commission. Previously he had been elected mayor for La Perla (a district in Callao) for the party Chim Pum Callao led by Alex Kouri, who is now serving jail time for corruption. His suitability for the position has been widely questioned owing to his links to corrupt administrations in the port of Callao.

The government has reached an agreement with Odebrecht, which is accused of paying bribes of more than 29 million dollars, to provide relevant information. It will also pay the government an initial compensation of 30 million soles. This payment is widely seen as the price payable to prevent the embargo of Odebrecht’s properties in Peru. It is also considered a very small amount considering the profit accruing to the Brazilian company from its Peruvian contracts obtained through those bribes.

The commission has met twice and has agreed to meet with the chief public prosecutor (the Fiscal de la Nación) to extend its remit to other project financings, including those initiated during the government of Alberto Fujimori (1990-2000), specifically the Chavimochic irrigation project agreed in 1995. The commission has 180 days to present its report.

The Lava Jato scandal promises to lift the lid on how Brazilian construction firms, and not just Odebrecht, did business in Peru since the beginning of the new millennium. Apart from Fujimori, the investigation will cover at least three presidencies: those of Alejandro Toledo (2001-06), Alan García (2006-11), and Ollanta Humala (2011-16). Senior politicians and government officials are likely to be called to account, just as has been the case in Brazil. President Pedro Pablo Kuczynski, who took office in July 2016, is also likely to be questioned. He held top positions in the Toledo administration as both finance minister and prime minister; many of the original contracts with Brazilian firms date from that period.

In fact, once all the contracts are investigated, it is likely that the bribes offered will be found to be well in excess of the 29 million dollars mentioned by the US Treasury in response to plea bargaining by Odebrecht. One of the biggest projects, involving a number of Brazilian firms, was the Inter-oceanic highway linking Peruvian ports with the Brazilian road network.

In the world wide context the US Department of Justice say “Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit—a ‘Department of Bribery,’ so to speak” and “ according to its admissions, Odebrecht engaged in a massive and unparalleled bribery and bid-rigging scheme for more than a decade, beginning as early as 2001. During that time, Odebrecht paid approximately $788 million in bribes to government officials, their representatives and political parties in a number of countries.”

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