Brazil corruption scandals cast shadow on Odebrecht Panama

THE SHADOW of Corruption scandals linked to the Government of Brazil and the construction company Norberto Odebrecht are undermining the credibility of the financial strength of both and, increasing the risks of political fallout in Panama.

Financial sector and other sources say that what is happening in Brazil cannot be separated from with what is happening in Panama and this could raise the political risk, the financial cost and the risk of project implementation.
After the arrest of Marcelo Odebrecht, president of the largest construction company in Latin America and prime contractor for the Government of Panama for their alleged involvement in a cartel of corruption in the procurement of state oil company Petrobras, the rating agency Standard & Poor’s downgraded the credit risk of the company, while Moody’s has placed it under review.
On Thursday it became known that the Brazilian Prosecutor’s Office has opened an investigation into former President Luiz Inacio Lula da Silva accused influence peddling to benefit Odebrecht international contracts, some of them funded by the state development bank BNDES.
These circumstances, and a weakened economy that will decline this year, according to the International Monetary Fund and increasing political tension, with one of the main leaders of the Brazilian Democratic Movement Party and Congress President breaking with the government of Dilma Rousseff, will contribute to the solvency image of Brazil which has experienced the maximum pain among emerging markets since June, says Bloomberg.
“Stocks fell and credit default swaps rose this week as a visit to Brazil by officials of Moody’s Investors Service had raised the specter of a downgrade of the sovereign rating,” the agency reports.
In Panama, Odebrecht alone or in consortium with other companies has handled projects totaling more than $8.5 billion some inaugurated with the presence Lula da Silva.
Others are still running. The most important is line 2 of Panama Metro, a $ 1.857 million signing and endorsement pending for the consortium (Odebrecht and Spanish FCC Construction) which will provide funding reports La Prensa
Roberto Brenes, CEO of Panama Stock Exchange said that what is happening may affect the ability of the company to win contracts in the coming years, which would impact its future cash flow, with which financial commitments are paid.