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Scandal-plagued Brazilian construction giant Odebrecht files for bankruptcy

Erika Santelices, AFP | People demonstrate to reject corruption and against Dominican President Danilo Medina for allegedly obstructing justice in the bribery scandal of Brazilian construction firm Odebrecht.

Scandal-ridden Brazil construction giant Odebrecht, which has admitted to spending nearly $800 million to bribe officials across Latin America to win contracts, filed for bankruptcy protection Monday, judicial sources said.

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Company lawyers filed a request with the bankruptcy court in Sao Paulo to negotiate debts of more than $20 billion dollars, officials quoted by Brazilian media said.

The demand makes it the biggest debt protection process in Brazilian history, exceeding that of telecom provider Oi in 2016.

The procedure allows Odebrecht to maintain its business activities while giving it six months to settle with its creditors.

Among the major creditors of Odebrecht are the public banks Banco Nacional de Desarrollo, Banco de Brasil and Caixa Economica Federal.

What was the Odebrecht corruption scandal?

The request for bankruptcy protection was precipitated by the suspension of the sale of the group's interest in Braskem -- a joint petrochemical company formed with Petrobras -- to Dutch firm LyondellBasell, and the May filing for bankruptcy protection by Odebrecht Atvos, the second-largest ethanol producer in the country.

Odebrecht, which is currently in the process of selling assets to limit its debt, has thus found itself in an even more precarious position vis-a-vis its creditors.

Founded in 1944, Odebrecht S.A. has long been one of Brazil's economic giants, building everything from the Miami Heat basketball arena to a hydroelectric dam in Angola.

Major corruption scandal

Often described as a construction company, Odebrecht has also been a major player in engineering, agriculture and petrochemical production.

But now, Odebrecht is at the centre of Latin America's biggest corruption scandal that has rocked governments and political parties in Brazil, Peru, Colombia and other countries, sending former presidents and senior officials to jail.

Once one of the most influential people in Brazil, company chief Marcelo Odebrecht was sentenced to 19 years in prison for his role in the scandal -- although he is now serving a reduced sentence in his luxurious Sao Paulo mansion.

Dozens of politicians have become embroiled in the affair, including former Brazil presidents Michel Temer and Luiz Inacio Lula da Silva, who is serving a 12-year jail sentence for accepting bribes from the company.

Peru is the other country hardest-hit by the scandal: Odebrecht has admitted paying at least $29 million in bribes to Peruvian officials since 2004.

Officials in Ecuador, Venezuela, Panama and the Dominican Republic have also been tainted.

According to the US Justice Department, Odebrecht paid $788 million in bribes across 12 countries, with presidents as well as former heads of state and ministers involved.

In 2018, the construction giant agreed to pay a $700 million settlement to the Brazilian government as part of a $2.6 billion package it has committed to shell out to the United States, Switzerland and Brazil.

(AFP)

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