Brazil’s anti-corruption probe targets transport cartel
December 19, 2017
Development: On 18 January, Brazil’s anti-trust regulator (Cade) announced it was investigating a cartel of construction companies which allegedly banded together to win public transport tenders in seven different states.
Significance: This is the latest twist in Brazil’s three-year old anti-corruption investigation, ‘Operation Car Wash’. Cade opened the investigation after current and former executives from construction company Camargo Corrêa admitted to participating in a cartel of companies to win at least 21 public infrastructure projects over a period of 16 years. The anti-trust regulator has teamed up with the public ministry in São Paulo state (MPF-SP) to determine whether the allegations are true.
Camargo Corrêa provided evidence to Cade that it had engaged in anti-competitive practices between 1998 and 2014 to build public transport networks, mainly metros, in the states of Bahia, Ceará, Minas Gerais, Paraná, Rio de Janeiro, Rio Grande do Sul, and São Paulo, as well as the federal district (DF). The information comes from a leniency agreement between Camargo Corrêa and local authorities, which allows the construction company to negotiate reduced penalties in exchange for information.
The cartel allegedly comprised at least nine other companies, including Odebrecht, Andrade Gutierrez, OAS, and Queiroz Galvão. Many of these companies have already been targeted for operating as a cartel and participating in fraudulent project bidding as part of a separate corruption probe involving the state-owned oil company Petrobras.
At this point, only the construction companies are under investigation. But more probes could follow about whether state governments were complicit in allowing the transport cartel to prosper.
Looking Ahead: If Cade finds the construction companies guilty, they could be fined up to 20% of their revenues. Individuals could also be penalised with fines of between R$50,000 (US$15,186) and R$2bn (US$607.5m), as well as other disciplinary measures.
Latin American Newsletters (LatinNews) was founded in London in 1967 to provide expert political, economic, and security analysis on Latin America and the Caribbean. For nearly 50 years, it has been acknowledged as the foremost authority on the region.