Institutionalised corruption in the region?

28 June 2015

The ongoing Odebrecht scandal in Brazil threatens to drag through the mud more than one Peruvian government and many in the business elite. In November 2014, federal police in Rio de Janeiro intervened in the main offices of the giant construction company and several of its main directors were accused of systematically bribing officials in Petrobrás to win favourable contracts. On 19 June, the president of the firm Marcelo Odebrecht was arrested and accused of leading the corruption scheme. His company could be fined in excess of US$450 million. President Dilma Rousseff and ex-president José Ignacio Lula da Silva may also be at risk.

Questions have now emerged on the business practices of Odebrecht in the rest of the region, and in particular in Peru where it has led many major infrastructure projects during the administrations of Alejandro Toledo, Alan García and Ollanta Humala. There have been allegations (see for example that both Toledo and García received generous incentives to ensure that Odebrecht would gain the contract for the Inter-oceanic highway linking Brazil and Peru. This has led to questions being asked as to whether the current government, which has had close ties to Brazil, and even the municipal administration in Lima, may have had links with this corruption network.

Peru’s chief public prosecutor (Fiscal de la Nación) Pablo Sánchez has opened an investigation into allegations of corruption surrounding the construction of the Inter-oceanic Highway. The fiscal Hamilton Castro has been entrusted with the case. “If in Brazil people from the [construction] firms [involved], it means that any possibility that these corrupt deeds may affect Peru merits investigation”, he is quoted as saying.

Both Toledo and Garcia deny any acceptance of bribes from this project, which was contracted and executed during their terms of office. Camargo Correa, another Brazilian construction company involved in the Inter-Oceanica, has also denied wrongdoing in respect to the contract to build a section (Tramo 4) of the road.

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