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IDB debars Brazilian conglomerate for $60 million kickback scheme

The Inter-American Development Bank (IDB) announced Friday the 37-month debarment of Andrade Gutierrez Engenharia S.A. and eleven subsidiaries for bribing public officials in connection with four IDB-financed projects in Brazil.

The Brazil-headquartered company admitted that it schemed to bribe government officials in exchange for contract awards, the IDB said.

For example, during one contract between 2009 and 2012, AG Engenharia agreed to pay government officials between five percent and ten percent of each contract amount and a one-off payment equivalent to about $11.8 million. Based on the value of the contracts, the bribes potentially totaled around $47 million, the IDB said.

In another contract, AG Engenharia agreed to pay government officials seven percent of any contract payment as a kickback. Based on the values of the underlying contracts, the illegal payments were around $1.9 million.

Early in the IDB’s investigation, AG Engenharia fully disclosed the bribery, cooperated with the Office of Institutional Integrity, an independent office of the IDB. The company also provided investigators with unhindered access to information, took remedial measures, and voluntarily restrained from bidding in IDB Group-financed activities during the investigation, the IDB said.

The IDB said the “substantial cooperation” was reflected in a significantly reduced sanction. With credit for the period of voluntary restraint, the remaining debarment period is two years and six months.

Separately, in 2018, AG Engenharia settled these and other matters with Brazilian authorities by agreeing to pay more than $381 million in fines.

The company is ineligible for any IDB-financed contract or work until the debarment ends.

The IDB said AG Engenharia committed “to report on its compliance program through an existing independent monitor and continued cooperation with [the IDB’s Office of Institutional Integrity], including internal investigations that are intended to uncover systemic integrity risks to IDB Group-financed activities.”

AG Engenharia has over 220,000 employees worldwide.

The Washington, DC-based IDB is the biggest development finance lender in Latin America and the Caribbean. It has 48 member countries, including 26 borrowers.

The debarment qualifies for cross-debarment by the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the African Development Bank.

A list of all Inter-American Development Bank debarred entities and individuals is here.

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