December 4, 2017 / 3:33 PM / a year ago

Construction executives detained in Peru in graft probe

LIMA (Reuters) - Four former and current executives of Peruvian construction companies were detained pending trial on Monday, accused of colluding with Brazilian builder Odebrecht to bribe a former president.

Judge Richard Concepcion ordered the men, who deny wrongdoing, to be held in pre-trial jail to ensure they do not flee or obstruct the law, as prosecutors prepare criminal charges.

The decision marked the first time executives from major Peruvian companies have been jailed in the ‘Car Wash’ scandal, Brazil’s largest-ever corruption probe that has widened to include other Latin American countries.

Odebrecht has admitted to bribing local officials in 12 countries to secure public works contracts over the course of a decade and promised authorities that it would provide details.

Prosecutor Hamilton Castro accused Jose Alejandro Grana and Hernando Alejandro Grana, who once headed Peru’s biggest construction group Grana y Montero, and Fernando Gonzalo and Jose Fernando Castillo, who work for two private contractors, of providing $15 million of a $20 million bribe that Odebrecht paid.

The money was paid to ex-president Alejandro Toledo to secure highway contracts that the companies partnered together on a decade ago and had been disguised on company books as the cost of “additional risks” covered by Odebrecht, Castro said at a court hearing.

The judge also ordered Gonzalo Ferraro, a former Grana y Montero manager who was in local hospital, to be placed under house arrest.

All five men deny any wrongdoing and are appealing the judge’s ruling, said Ferraro’s attorney Roger Yon.

Grana y Montero, and the two private companies, JJC Contratistas Generales and Ingenieros Civiles y Contratistas Generales, declined to comment. The three companies have previously denied knowing about or taking part in Odebrecht’s bribes.

Grana y Montero’s U.S.-listed shares closed 6.9 percent lower on Monday.

The corruption probe has shaken up the local construction sector as the government prepares to award nearly $8 billion in contracts for rebuilding infrastructure and housing destroyed by flooding.

President Pedro Pablo Kuczynski, who served in Toledo’s cabinet when the highway contracts were awarded, has said he knew nothing about the alleged bribe for Toledo.

Toledo, ordered to pre-trial detention in February, has denied taking bribes from Odebrecht. Peru is seeking his extradition from the United States.

A second former President, Ollanta Humala, has been in pre-trial detention since July and denies allegations he took illicit funds from Odebrecht.

Reporting by Marco Aquino, Writing By Mitra Taj; Editing by Andrew Hay and Rosalba O'Brien

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