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Latin America: Odebrecht probe claims regional victims

Thursday, January 26, 2017

The US Department of Justice reached a record plea bargain with construction giant Odebrecht over bribery charges

The bribery probe now points to illegal payments in eleven countries besides Brazil, tainting former and current officials

Source: US Department of Justice

Outlook

Ongoing Brazilian investigations into the Petrobras corruption scandal (‘Operation Car Wash’) have embroiled Brazil’s leading construction companies, and plea bargains by 77 former executives of Odebrecht could widen the probe further.

In December 2016, Odebrecht and the petrochemical company Braskem (controlled by Odebrecht and Petrobras) pleaded guilty in a US federal court to violating the US Foreign Corrupt Practices Act.

According to the Department of Justice, “during the relevant time period, Odebrecht, together with its co-conspirators, paid approximately $788 million in bribes in association with more than 100 projects in twelve countries”, all but two of them in Latin America, “with ill-gotten benefits to Odebrecht and its co-conspirators of approximately $3.336 billion”.

Impacts

  • The fallout from the scandal has virtually derailed Brazilian politics, and the ripple effects will hit other countries.
  • Peru’s 2017 GDP growth may fall by 1 percentage point as a result.
  • The scandal could affect the Ecuadorian presidential elections in February.
  • Both political credibility and prospects for Brazilian recovery and regional infrastructure may suffer.

See also