400 percent return on bribery investment
By Geovanny Vicente Romero
OVER the last 73 years, Norberto Odebrecht has become the leading construction company in Latin America, active in 27 countries worldwide and helping a new era of modern infrastructure development in the Americas while gaining a 400% return on bribery “investment”
It has built state-of-the-art highways in Colombia, power plants in Dominican Republic, canals and aqueducts in Ecuador, the metro in Panama City, and hydroelectric plants in Peru. Odebrecht has also completed high-profile development projects in Africa, Europe, and the Middle East.
But behind the business empire lay hidden an entrenched corruption scheme that spread throughout the region.
Under the leadership of the founder’s grandson, Marcelo Odebrecht (currently jailed) one of the largest ever international corruption scandals was uncovered showing that Odebrecht used criminal practices to gain lucrative public works projects.
A 3-year investigation, known as “Operation Lava Jato” (Car Wash)” began with an inquiry into illegal payments made to executives at state owned Petrobras, and ended up tarnishing the popularity of Brazil’s then-President Dilma Rousseff, implicating congressmen involved in President’s Rousseff’s controversial impeachment, and tainting former President Lula da Silva.
The investigation got its name because of a network of car service stations that were used to divert illegal payments.
On December 21, 2016, the U.S. Department of Justice published an investigation into Odebrecht, shoeing the company paid bribes to public officials from 12 countries.
The company agreed to pay a $3.5 billion the largest bribery fine in history.
At the start of 2016, the Brazilian judge behind Lava Jato, Sergio Moro, filed various court orders against Odebrecht executives for corruption charges.
Fortune magazine named Judge Moro among the World’s 50 Greatest Leaders in 2016.
Brazil has taken great strides in establishing a higher degree of transparency and accountability by embarking upon Lava Jato considered the largest anticorruption investigation in the history of the Americas.
The corruption scandal uncovered political linkages, and in April 2014, the Lava Jato had 36 people summoned for money laundering and forming a criminal organization, and 30 people had been detained, among them the former director of Petrobras, Paulo Roberto Costa.
Nearly one year later, Minister of the Supreme Court Teori Zavascki reopened the Carwash investigation into 47 politicians suspected of involvement with Petrobras, among them congressmen and senators.
The media attention and corruption accusations led Brazil’s National Development Bank of Brazil to suspend the disbursement of $3.6 billion that had been approved for 16 infrastructure projects in Latin American countries.
In Feb. 2016, publicist and political strategist Joao Santana was arrested and accused of receiving money from Petrobras. Brazilian authorities detained Santana upon his return from the Dominican Republic, where he was advising the victorious reelection campaign for Dominican President Danilo Medina.
Santana, a political marketing and campaign guru played a key role in electing six presidents across Latin America, and one president in Africa. He was also an adviser to the failed bid of Jose Dominhgo Arias in Panama.
Santana received millions of dollars from Odebrecht to finance and advise political campaigns in key business markets.
Swiss authorities uncovered documents indicating some transactions had been made through a Swiss bank account that Joao and his wife had under the name of an offshoring company called Shellbill, headquartered in Panama.
The arrest of Santana, “the maker of presidents”, affected leaders from Dominican Republic to Angola. This quid-pro-quo scheme revealed the funding of political campaigns in exchange for awarding Odebrecht significant development contracts.
According to Brazilian media, Joao and his wife Monica Moura admitted that $3 million of the $7 million that Santana’s firms received from Odebrecht were expressly for advisory services to presidential campaigns in Panama, Argentina, and other countries.
Following Brazil other countries in Latin America have begun investigating the extent of Odebrecht’s corruption schemes.
Below is a country-by-country summary of efforts to hold those involved accountable.
ARGENTINA
Bribes Paid: $35 million Fines: 0 Charged: 0 (1 under investigation) Detained: 0
Odebrecht paid more than $35 million from 2007-2014 to intermediaries,knowing that payments would be made, in to government officials, according to Argentinean newspaper Infobae.
Argentina Prosecutor Federico Delgado decided to investigate the country’s Director of the Federal Intelligence Agency Gustavo Arribas, one of President Mauricio Macri’s closest advisors, to see if Arribas received $600,000 from Odebrecht. On February 2, Arribas claimed his innocence before a Congressional Bicameral Intelligence Commission.
COLOMBIA
Bribes Paid: $11 million Fines: 0 Charged: 2 Detained: 2
According to a report from Colombia’s Attorney General, the Vice Minister of Transport Gabriel Garcia Morales, in the administration of former President Alvaro Uribe, has been detained accused of receiving $6.5 million to guarantee that Odebrecht was selected for the construction of the highway, Ruta del Sol, through Colombia.
During the years 2009 and 2014, Odebrecht paid $11 million in bribes throughout Colombia.
Former Senator Otto Bula was detained for his alleged connection to receiving a $4.5 million bribe in order to secure the contract for the Ocaña-Gamarra highway.
Recently, suspicions emerged about Oscar Ivan Zuluaga the previous presidential candidate for the opposition party Democratic Center who received financing from Odebrecht for his campaign in Colombia’s 2014 presidential election.
Colombian prosecutors have said that they suspect current President Juan Manuel Santos, , received money for his 2014 re-election campaign.
DOMINICAN REPUBLIC
Bribes Paid: $92 million Fines: $184 million Charged: 0 Detained: 0
Second only to Venezuela, The Dominican Republic received the largest amount of bribes from Odebrecht.
The company has been constructing major highways and the Punta Catalina thermoelectric plant whose contract was awarded on December 9, 2013 in the amount of the $2.4 billion.
The Punta Catalina Project value was supposedly discounted to $1.9 billion following public outcry. But, according to documents filed in Dominican courts, for the same construction, a Chinese firm Gezhouba Group submitted a bid to complete the for less than half the cost.
The Punta Catalina hydroelectric power project will be built to utilize coal power, failing to take into account that Dominican Republic is a fragile island vulnerable to the adverse affects of climate change, accelerated by dirty power sources.
Despite the large amount of bribes paid in Dominican Republic, the country has carried out only a few interrogations that have not led to any formal charges or detentions.
Legal action has been limited to accusations against businessman Angel Rondon as the individual responsible for receiving the $92 million. Photos and videos have emerged indicating a close relationship between Rondon and Dominican President Danilo Medina, and other politicians.
Since the announcement that Odebrecht will pay the Dominican Republic a $184 million fine, little has been reported about the case. On January 22, this year, Dominican citizens took to the streets with the largest public march against corruption in the country’s history.
PANAMA
Bribes Paid: $59 million (admitted by Odebrecht but estimated at up to $1 billion by financial analysts) Fines: $59 million (initial guarantee) Charged: 17 Detained: 3
Odebrecht has a long track record of development projects in Panama totaling more than $9 billion, such as the Metro, Pan-American Highway, Cinta Costera, transmission lines, hydroelectric power plant, and irrigation systems.
Panama’s Attorney General Kenia Porcell has charged 17 people, among them three former government officials, eight local businessmen, five foreigners, and an executive from a local bank, after Switzerland terminated the confidentiality of these clients.
Switzerland revealed to Panamanian authorities $22 million deposited in bank accounts of the sons of former President Ricardo Martinelli.
Panama has terminated the company’s work on the hydroelectric power plant Chan II and eliminated the company from bidding on Metro 3.
President Juan Carlos Varela has agreed to an investigation into his own administration as well as that of his two predecessors, Martin Torrijos (2004-2009) and Ricardo Martinelli (2009-2014). The founding partners of Mossack Fonseca and a lawyer of the company are in detention and allegations have been made that President Varela received Odebrecht money for his election campaign
PERU
Bribes: $29 million Fines: $262 million Charged: 4 Detained: 4
In Peru, Odebrecht has built infrastructure projects including a hydroelectric power plant and hydraulic transfer system linked to $29 million in bribes, During the management of presidents Alejandro Toledo (2001-2006), Alan García (2006-2011) and Ollanta Humala (2011-2016).
A former Ministry of Transport & Communications official during the government of Garcia has been detained, along with former government official Edwin Luyo. The former Vice Minister of Communications Jorge Cuba, until recently was a fugitive with an international warrant for his arrest.
According to news agency Andina, Odebrecht paid $7 million to Luyo and Cuba. Odebrecht has paid $262 million as a fine for not completing its construction contract of the gas pipeline Gasoducto del Sur.
On February 3, , Jorge Cuba’s wife, was charged with owning 35 percent of the offshore business Oblong International, created in Andorra to receive money from Odebrecht.
According to La República, former President Alejandro Toledo had received $20 million for awarding major highway engineering and construction contracts. It is thought that this money was deposited in the bank account of Toledo’s friend Josef Maiman. On February 4, Peruvian prosecutors raided Toledo’s home. And the Odebrecht case threatens to imprison all Peruvian former presidents.
RETURN ON INVESTMENT
According to Switzerland’s Public Ministry, for each $1 million that Odebrecht paid in bribes, the company generated $4 million in profit.
The widespread investigations and fines challenging a culture of impunity and its profitability are a step towards a greater degree of transparency to move the region from the destabilizing effects of endemic corruption.
Geovanny Vicente Romero is a political analyst and lecturer based in Washington, D.C. He can be reached on Twitter @geovannyvicentr
