Peru Cancels US$7 Billion Contract with Brazil’s Odebrecht

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Caught up in a massive international corruption scandal, Peru’s government announced that it was cancelling a US$7 billion pipeline project led by Brazilian construction giant Odebrecht. The Peruvian government also said the Brazilian company would have to shut down all of its operations in the country and leave.

“They’re going to have to sell their projects. They have to go, it’s over,” President Pedro Pablo Kuczynski said in an interview to a local radio station on Tuesday.

At the end of 2016 the Peruvian government had already announced that the Brazilian company would not be able to participate in new contract bids with the government due to its involvement in ‘acts of corruption’.

Over the weekend Peruvian authorities arrested a government official in connection to statements made by Odebrecht where the company admitted it paid over US$7 million in bribes in 2009 to win the Lima Metro Rail line contract.

Odebrecht has also admitted to paying a total of approximately US$29 million in bribes to Peruvian officials and executives between 2005 and 2014, for contracts to build public works. In early January the company agreed to pay the Peruvian government US$8.9 million in reparation.

In a press release, Odebrecht said that it was working with Peruvian officials to resolve the issues and to pay reparation. “The company is doing everything possible to expose and clarify in detail all the facts so that justice reaches all those involved, also allowing the payment of just reparation to the Peruvian State,” read the statement.

The Brazilian construction giant also said that it was seeking with officials ‘alternatives for ongoing projects to continue’.