Brazil Prosecutors seek $1.6 Billion From Builders in Graft Case

Brazil Prosecutors seek $1.6 Billion From Builders in Graft Case

1:21 PM UYST 
February 20, 2015

(Bloomberg) — Some of Brazil’s biggest building companies were targeted for the first time in an investigation into alleged kickbacks at Petroleo Brasileiro SA, with prosecutors seeking 4.47 billion reais ($1.6 billion) in compensation.

Camargo Correa, Mendes Junior, OAS, Galvao Engenharia, Grupo Engevix and Sanko were accused by federal prosecutors in Brazil’s Parana state of diverting public funds and should be banned from new government contracts, the prosecutors said in an e-mailed statement Friday.

The allegations — called acao de improbidade in Portuguese, or misconduct action — mark the first time companies have been singled out in connection with Brazil’s biggest-ever corruption scandal, in which Petrobras executives are accused of accepting bribes from a cartel of builders. Until now, only individuals have been accused of wrongdoing. Executives from companies including OAS and Camargo Correa have been jailed since November as part of the first sweep against contractors in the investigation known as the Carwash.

“Some people think Carwash is in the middle or close to an end — no, it’s just beginning,” prosecutor Deltan Dallagnol said in an interview in Curitiba, Brazil. “These are the first concrete actions against the contractors.”

Companies targeted Friday are the same that had warrants issued against them in November. Prosecutors are also preparing an accusation, including a larger group of companies, for forming a cartel to take advantage of the bidding process for Petrobras work, said Carlos Lima, a prosecutor in the case.

“We know for sure there was a cartel,” Lima said in an interview from his office in Curitiba, where the investigation is based. “I don’t like to get ahead of myself and say this will happen, but it will. It’s just a matter of time.”

Petrobras is still gauging the cost of the scheme, the state-controlled company said in January. Curitiba criminal court Judge Sergio Moro, in charges filed in December against executives of contractors, wrote that 16 companies allegedly formed a cartel between 2006 and 2014.

In Brazil, while misconduct actions are usually taken against public officials, they can apply to companies that participate in corruption schemes.

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