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Odebrecht scandal slowing Latam infrastructure development -Moody's
May 3, 2017 / 8:33 PM / 3 months ago

Odebrecht scandal slowing Latam infrastructure development -Moody's

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May 3 (Reuters) - Fallout from a series of corruption probes involving Brazilian construction firm Odebrecht S.A. is slowing down infrastructure development and creating negative spillovers across Latin America, Moody's Investor Service said on Wednesday in a report.

Odebrecht is at the heart of Brazil's bribery and kickback probe, known as Lava Jato or Car Wash, which has been linked to hundreds of politicians and public figures and cited as among the factors leading to the impeachment of former President Dilma Rousseff.

"Several infrastructure concessions have been halted and will need to be re-launched as a result of the Odebrecht corruption scandal," Moody's Vice President Adrian Garza said in the report. "The legal and administrative hurdles for these projects will likely take another 12 to 24 months."

Moody's also said it expects that the resulting slowdown in the execution of projects will delay the pace Latin American countries are able to grow their infrastructure, making it difficult to reduce the region's sizable infrastructure gap.

The company has admitted to paying $788 million in bribes to government officials in 11 countries beyond Brazil, including nine in Latin America, according to the Moody's report.

Brazilian President Michel Temer has been accused of hosting a 2010 meeting where an Odebrecht executive was asked to arrange a $40 million illegal payment to his political party. Temer has dismissed the graft accusation.

Former Peruvian President Ollanta Humala also has been accused of taking illicit funds from the company as have a number of high-ranking politicians from across the region.

Reporting by Dion Rabouin; Editing by Christian Plumb and Diane Craft

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