Latin America & Caribbean

Odebrecht: Gigantic corruption scandal shows no sign of waning

Alan Garcia delivers a speech Image copyright Reuters
Image caption Alan Garcia killed himself before he was arrested over corruption allegations

Latin America's economic boom of the previous decade brought a much-needed boost to the region's infrastructure.

Cities like Caracas and Lima expanded their metro lines. Argentina built a new rail system that connects nearby towns to the capital. Brazil spent years erecting football arenas and various sports complexes to host the World Cup and the Olympic Games.

Even communist Cuba built a modern new port in the city of Mariel.

It was a hopeful sign of economic progress. But as the region's economic shine faded in the following years, an uglier side of progress emerged.

All these investments - and many others - had a common thread behind them: the presence of disgraced Brazilian construction giant Odebrecht.

The news this Wednesday of the suicide of former Peruvian president Alan Garcia, just as he was being arrested on allegations he received bribes from Odebrecht, shows that one of the greatest corporate corruption scandals in the world is not going away.

It is hard to find another company in Latin America - or even in the world - that has had so many high-level political connections in so many countries for such a long period of time.

Founded in the northeast of Brazil in the 1940s, Odebrecht was for a while one of Brazil's most competitive construction companies, winning contracts not just in Latin America but also in the Middle East and Africa.

It won numerous awards and was voted one of the best companies to work in Brazil.

But in 2015 the arrest of its CEO Marcelo Odebrecht shattered the firm's image.

Initially he denied all accusations of corrupt links with politicians, but two years later a plea bargain deal saw him come forward with allegations that are still rocking Latin American politics to this day.

The country and the circumstances change, but the underlying scandal repeats itself in Argentina, Colombia, Brazil, Peru and many other places: Odebrecht offers bribes to politicians in power in exchange for exclusive, multibillion dollar infrastructure projects.

Image copyright Reuters
Image caption Supporters of Alan Garcia have been left distraught

Bribes were paid to officials either for personal gain or to boost up party finances. Mr Odebrecht also had the habit of dealing with politicians from all different ideological backgrounds and in federal, state and municipal governments.

It is not easy to take Mr Odebrecht at his word. As in all plea bargain deals, he has every incentive to implicate as many high-ranking officials as he can, because this can help him reduce his prison sentence. And it has been working so far.

His 31-year prison term was reduced to 10 years and may drop even further. Since the end of 2017 he has been serving it as house arrest.

Mr Odebrecht told prosecutors at the time that the company had paid bribes to 39 members of Congress.

Investigations revealed that Odebrecht elevated corporate corruption to a whole new level by creating in 2006 a "department of structured operations", which worked exclusively in handling illegal payments to officials.

Odebrecht technicians even came up with a special software to make bribery payment run more smoothly.

Fresh scandals

Four years on since the first revelations, the Odebrecht scandal is still providing fresh revelations.

In Brazil, the former governor of São Paulo and presidential candidate Geraldo Alckmin had his bank accounts frozen this week. He is being investigated for allegedly receiving illegal campaign donations from Odebrecht, an allegation which he denies.

The head of Brazil's Supreme Court, Dias Toffoli, has ordered a magazine to withdraw a news story which suggested alleged links between him and Marcelo Odebrecht. The case of censorship drew criticism from fellow judges, politicians and advocates of free speech.

This month prosecutors asked for an extension of an inquiry into alleged payments made by Odebrecht to the speaker of the lower house of Congress Rodrigo Maia.

Image copyright Huw Evans picture agency
Image caption Former Odebrecht president Marcelo Odebrecht

Mr Maia is one of Brazil's most powerful politicians at the moment and a key figure in the negotiations of reforms in the country.

And there could be more to come.

A group of MPs want to summon Mr Odebrecht to a Congress hearing next month to ask him about multiple loans the Brazilian government gave to the company in the past decades which were vital for many projects to go ahead, such as the Caracas subway and the Mariel port.

But Peru is perhaps where it has caused the most severe crisis, where the company says it paid almost 30 million dollars in bribes from 2005 to 2014.

Four former presidents and the leader of the opposition have all been implicated in scandals regarding Odebrecht.

Last year then president Pedro Pablo Kuczynski resigned hours before facing an impeachment vote, after it surfaced that he failed to declare Odebrecht payments made to companies in his name.

The scandal has discredited virtually the entire political elite of the country, as all major parties and players have been implicated.

Odebrecht declined to comment Wednesday's news of the suicide of Mr Garcia.

Despite its silence, Odebrecht's name will still be making headlines for months to come.

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