The Construction Club

10 February 2019

Both officials at the transport and communications ministry and executives within the construction industry will wait with bated breath to see what will be revealed as two members of the so-called ‘Construction Club’ (Club de la Construcción) prepare to spill the beans on how construction contracts have been awarded over the last two decades. The story is covered in detail in last week’s La República

Under plea-bargaining agreements, Rodolofo Prialé de la Peña and Carlos García Alcázer are collaborating with judicial authorities by revealing all they know in return for their own immunity from prosecution. The information they give will complement that soon to be provided by Odebrecht, the Brazilian construction firm at the centre of the Lava Jato scandal.

Negotiations with Prialé and García began back in August last year. It appears that Prialé was the point man in the Club de la Construcción and García an advisor to the ministry. The company employed to channel bribes appears to have been Prialé’s Lual Contratistas Generales.

The first batch of information they will provide refers to bribes paid between August 2011 and June 2014, during Alan García’s second term in office (2011-16). These relate to contracts to build and maintain roads. They have promised to provide further information on the years of the Humala government (2011-16).

The amounts paid varied between 2.9% and 5% of the total value of contracts. The Construction Club appears to have operated as a kind of cartel in which Peruvian (and later Brazilian) construction companies divvied up contracts on the basis of payments to Prialé and ministry officials.

Once the detailed annual road construction/maintenance budget for the ministry was made known, the Club would decide who would get the contract; other firms would submit bids well in excess in order to appear to be complying with competitive bidding norms.

The amounts paid to secure contracts were originally in cash, but then they had to be disguised through fake contracts so as to dodge legal requirements designed to prevent asset laundering. In the case of Brazilian firms, the money was transacted through firms in Panama and the British Virgin Islands. The information provided so far by Prialé and García includes the amounts paid by Brazil’s OAS, Odebrecht, Andrade Gutiérrez, the contracts to which they related, and the routes by which money was transferred.

More details of who received how much, when, and how will become clearer over the following months. So far, it seems that 250 million soles were paid in bribes for contracts with the Provias Nacional agency, an entity within the ministry of transport and communications. As a result of the new information released, the number of construction companies now under investigation has increased substantially.

Carlos Paredes Rodríguez, the minister of transport and communications between 2011 and 2014, denies receiving 17 million soles in bribes. He maintains that Prialé and García are lying in order to save themselves from jail over the sums they themselves received. 

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