Brazil World Cup Projects Said to Include Andrade Bribes

  • Conglomerate said to agree on $263m in fines for leniency deal
  • Andrade said to admit to paying bribes for Petrobras contracts

Andrade Gutierrez SA, the conglomerate whose chairman was arrested in Brazil’s largest corruption scandal, has admitted to paying bribes to secure World Cup construction contracts as part of a leniency deal, said a person familiar with the agreement.

The admission makes Andrade the first contractor to admit to paying bribes in Brazil related to sport’s most-watched event. A 1 billion reais ($263 million) payment by Andrade’s building unit to secure the deal should clear the way for the country’s second-largest engineering and construction group to regain access to public works contracts, the person said. Andrade also admitted to paying bribes for contracts with Petroleo Brasileiro SA, the state-controlled oil producer at the center of the corruption scandal.

Andrade’s agreement to pay the penalty fee is the highest related to the scandal yet, besting the 800 million reais paid by builder Camargo Correia in July.

The leniency agreement, which still needs to be signed by a judge, includes recognition that the company and its executives paid bribes in a pay-to play scheme for projects that go as far back as 1987, the person said. The contracts detailed in the accord also involve the hydroelectric plant Belo Monte, a railroad and Petrobras’s Comperj refinery, the person said. Andrade declined to comment.

Norte Energia, the group that operates Belo Monte, said its not part of the investigations.

After more than 18 months, police and prosecutors have found that kickbacks have been widespread in contracts with state-controlled companies and state institutions. More than 110 people have been arrested since an investigation dubbed Carwash started in early 2014. The massive graft scandal has crippled Brazil’s economy and left President Dilma Rousseff fighting for her political survival.

Brazil spent a record $11 billion to prepare for the World Cup, and almost all of the 12 stadiums used ended up delayed and well over budget. The majority of the funds to reform or build the new arenas came from public resources, even though Brazilian organizers said the private sector would pay for them when the country was awarded hosting rights in 2007.

The Maracana Stadium

Photographer: Dado Galdieri/Bloomberg

Andrade was involved in works related to Rio de Janeiro’s Maracana stadium, the facility which hosted Germany’s World Cup final victory over Argentina. It also worked on the most controversial project, the Estadio Mane Garrincha in Brasilia.The arena cost $900 million by the time it was completed, making it the world’s second-most expensive soccer stadium behind London’s Wembley. With no first division soccer team in the city, the arena is operating at a loss and the space being used to house government workers and to park buses.

The Beira-Rio stadium in Porto Alegre and the Arena Amazonas in the jungle city of Manaus are Andrade’s other World Cup stadium projects.

A spokesman for Brasilia’s local government said the stadium was built by a previous regime, and current governor Rodrigo Rollemberg is willing to “contribute tirelessly to assist the investigation.” Rio’s state government said it wasn’t aware of any wrongdoing. Officials responsible for the other arenas didn’t immediately respond to requests for comment.

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