Over the last 73 years, Odebrecht has become the leading construction company in Latin America, currently active in 27 countries worldwide. Odebrecht has helped usher in a new era of modern infrastructure development in the Americas.
They have built state-of-the-art highways in Colombia, power plants in the Dominican Republic, canals and aqueducts in Ecuador, the metro in Panama City, and hydroelectric plants in Peru.
The company’s presence is not limited to Latin America. Odebrecht has been awarded high-profile development projects in Africa, Europe, and the Middle East.
However, few imagined that behind this successful business empire laid hidden an entrenched corruption scheme that spread systematically throughout the region with more force than the Zika virus that has plagued Brazil in recent years.
Under the leadership of the founder’s grandson, Marcelo Odebrecht, one of the largest international corruption scandals was uncovered upon discovering that Odebrecht used deceitful practices to obtain lucrative public works projects in the countries it operated.
A three-year investigation, known as Operation Car Wash began with an inquiry into illegal payments made to executives at Petrobras, and ended up tarnishing the popularity of Brazil’s then-President Dilma Rousseff, implicating congressmen involved in President Rousseff’s controversial impeachment, tainting beloved politician and former President Lula da Silva, in addition to unraveling a dirty secret behind Odebrecht’s success.
This investigation received its name because of a nefarious network of car service stations discovered at the beginning of the probe that were used to divert illegal payments.
On December 21, 2016, the US Department of Justice published an investigation into Odebrecht, where the company was accused of paying bribes to public officials from 12 countries in order to win development contracts.
Bloomberg reported that the US Deputy Assistant Attorney General Sung-Hee Suh said, “This was a hidden but fully functioning Odebrecht business unit – a department of bribery so to speak – that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents.”
As a result of these serious accusations, the company agreed to pay a US$ 3.5 billion fine, the largest bribery fine in history, after being linked to paying US$ 439 million to public officials from Angola, Argentina, Colombia, Dominican Republic, Ecuador, Guatemala, Mozambique, Panama, Peru, and Venezuela.
In the beginning of 2016, the Brazilian judge behind Operation Car Wash, Sergio Moro, had filed various court orders against Odebrecht executives for corruption charges. Judge Moro left the Brazilian government with no alternative other than reform and reconciliation. As a result of his work, 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 Operation Car Wash, considered the largest anti-corruption investigation in the history of the Americas.
The corruption scandal uncovered political linkages, and in April 2014, the Car Wash operation consisted of 36 people summoned for money laundering and forming a criminal organization, while 30 people had been detained, among them the former director of Petrobras, Paulo Roberto Costa.
Nearly one year later, in March, 2015, the Minister of the Federal Supreme Court of Brazil, Teori Zavascki, reopened the Operation Car Wash investigation into 47 politicians suspected of becoming involved with Petrobras, among them various congressmen and senators.
The media attention and corruption accusations made the National Development Bank of Brazil suspend the disbursement of US$ 3.6 billion that had been approved for 16 infrastructure projects in Argentina, Dominican Republic, Guatemala, Honduras, Venezuela, among other countries.
Then, in February, 2016, well-known publicist and political strategist João 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 genius and campaign mastermind, played a key role in electing six presidents across Latin America, and one president in Africa. During these election campaigns, Santana leveraged his franchise of advisory firms, “Polis,” which he established in the countries he worked.
Additionally, João Santana had received millions of dollars from Odebrecht to finance and advise political campaigns in key markets for their business.
Moreover, Swiss authorities sent documents that indicated some transactions could have been made through a Swiss bank account that Santana and his wife had under the name of an offshoring company called Shellbill, headquartered in Panama.
The arrest of “the maker of presidents”, affected leaders from the Dominican Republic to Angola. This quid-pro-quo scheme revealed the funding of political campaigns were in exchange for awarding Odebrecht significant development contracts for infrastructure projects.
According to the Brazilian newspaper Folha de S. Paulo and Brazilian magazine Veja, Santana and his wife Monica Moura admitted that US$ 3 million of the US$ 7 million that Santana’s firms received from Odebrecht were expressly for the advisory services to presidential campaigns in Argentina, Panama, and other countries.
Similar to Brazil’s Operation Carwash, other countries in Latin America have begun investigating the extent of Odebrecht’s corruption schemes in their respective nations. The following is a country-by-country dashboard analysis of the valiant efforts made to hold those involved accountable.
Argentina
Bribes Paid: US$ 35 million Fines: 0 Charged: 0 (1 under investigation) Detained: 0
Odebrecht paid more than US$ 35 million from 2007 to 2014 to intermediaries, with the knowledge that these payments would be made, in part, to government officials in Argentina, 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 find out if Arribas received US$ 600,000 from Odebrecht. On February 2, 2017, Arribas claimed his innocence before a Congressional Bicameral Intelligence Commission.
Colombia
Bribes Paid: US$ 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, from the administration of former President Alvaro Uribe, has been detained accused of receiving US$ 6.5 million to guarantee that Odebrecht was selected for the construction of the major highway, Ruta del Sol, through Colombia.
During the years 2009 and 2014, Odebrecht paid US$ 11 million in bribes throughout Colombia. Former Senator Otto Bula was detained for his alleged connection to receiving a US$ 4.5 million bribe in order to secure the contract for the Ocaña-Gamarra highway.
Recently, suspicions emerged about the previous presidential candidate for the opposition party Democratic Center Oscar, Ivan Zuluaga, who is believed to have received financing from Odebrecht for his campaign in Colombia’s 2014 Presidential election.
Dominican Republic
Bribes Paid: US$ 92 million Fines: US$ 184 million Charged: 0 Detained: 0
Second only to Venezuela, Dominican Republic received the largest amount of bribes from Odebrecht at US$ 92 million. 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 US$ 2.4 billion.
The Punta Catalina Project value was supposedly discounted to US$ 1.9 billion following public outcry. However, according to legal documents filed in Dominican courts for the same thermoelectric plant construction, a Chinese firm, Gezhouba Group, submitted a bid to complete the same project for less than half the cost, US$ 900 million, which is a difference of US$ 1.1 billion following the supposed discount offered by Odebrecht.
The Punta Catalina hydroelectric power project will be built to utilize coal power, failing to take into account that the Dominican Republic is a fragile island vulnerable to the adverse affects of climate change, accelerated by dirty power sources.
Despite this large amount of bribes paid in the Dominican Republic, the country has carried out just a few interrogations that have not led to any formal charges or detentions. In fact, legal action has been limited to accusations against businessman Angel Rondon as the individual responsible for receiving US$ 92 million in bribes.
Before the Odebrecht case, little was known about this businessman, but due to this high-profile scandal, photos and videos have emerged indicating a close relationship between Rondon and Dominican President Danilo Medina, in addition to other politicians and the Dominican press.
Among the images, there is one where the Attorney General of the Dominican Republic Jean Alain Rodriguez is standing directly behind Rondon during an inauguration ceremony.
Furthermore, on October 27, 2013, President Medina presented Rondon with the Dominican Republic’s national merit award for breeding livestock.
Since the announcement that Odebrecht will pay the Dominican Republic a US$ 184 million fine, little has been reported about the case. On January 22, 2017, Dominican citizens took to the streets with the largest public march against corruption in the country’s history.
Panama
Bribes Paid: US$ 59 million Fines: US$ 59 million (initial guarantee) Charged: 17 Detained: 0
Odebrecht has a long track record of completed and active development projects in Panama totaling more than US$ 3 billion, such as the Panama City Metro, Pan-American Highway, coastal beltway, transmission lines, hydroelectric power plant, and irrigation systems.
Panama’s Attorney General Kenia Porcell decided to tackle the Odebrecht corruption scandal and 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 the US$ 22 million deposited in bank accounts of the sons of former Panamanian President Ricardo Martinelli.
As a result of these investigations, on January 28, 2017, Panama notified Odebrecht they would be terminating the company’s ongoing work on the hydroelectric power plant Chan II.
Additionally, Panama’s current President, Juan Carlos Varela, 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).
Peru
Bribes: US$ 29 million Fines: $262 million Charged: 4 Detained: 4
In Peru, Odebrecht has built large infrastructure projects including a hydroelectric power plant and hydraulic transfer system linked to US$ 29 million in bribes.
This information was revealed in the US Department of Justice report covering 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 Alan Garcia has been detained, in addition to the former government official Edwin Luyo.
In addition, the former vice minister of Communications, Jorge Cuba, who until recently was a fugitive with an international warrant for his arrest, was also detained.
According to the news agency Andina, Odebrecht paid US$ 7 million to Luyo and Cuba to gain an unfair advantage on contract bids. Odebrecht has just paid US$ 262 million as a fine for not completing its construction contract of the gas pipeline Gasoducto del Sur that the company was retained to build in Peru.
On February 3, 2017, several developments turned the case around: Jorge Cuba’s wife, a former professional volleyball player, returned from Miami and was charged with owning 35 percent of the offshore business Oblong International, created in Andorra to receive money from Odebrecht.
On the same day, Panama’s Attorney General Kenia Porcell visited Lima to meet with her counterpart about the Odebrecht case. Moreover, according to the Peruvian newspaper La República, former President Alejandro Toledo had received US$ 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 Feb. 4, 2017, Peruvian prosecutors raided the house of former president Alejandro Toledo, and with each passing day, the Odebrecht case threatens to imprison all Peruvian former presidents.
Just What the Doctor Ordered
Finally, according to Switzerland’s Public Ministry, for each million of dollars that Odebrecht paid in bribes, the company generated US$ 4 million in profit.
Given the lucrative nature of this level of corruption and the entanglements of virtually all levels of government and the private sector, the only elixir to cure this regional disease is stronger democratic institutions throughout Latin America.
The widespread investigations and fines challenging a culture of impunity and its profitability are just what the doctor ordered to guarantee a greater degree of transparency that can vaccinate the region from the destabilizing effects of endemic corruption.
Geovanny Vicente Romero is the founder of the Dominican Republic Center of Public Policy, Leadership and Development (CPDL-RD). He is a political analyst and lecturer based in Washington, D.C. Reach him on Twitter @geovannyvicentr
