October 24, 2018 / 6:05 PM / a year ago

Odebrecht offered Mexico $18 million to resolve graft cases: document

MEXICO CITY (Reuters) - Mexico this year rejected an offer by Brazilian construction firm Odebrecht SA [ODBES.UL] to pay $18 million and supply information related to graft cases, according to a document and a person with knowledge of the matter, the conglomerate’s latest attempt to move past a major regional corruption scandal.

The corporate logo of the Odebrecht SA construction conglomerate is pictured at its headquarters in Sao Paulo, Brazil August 3, 2018. REUTERS/Paulo Whitaker

In exchange, the company had asked Mexico to lift fines and sanctions that block it from participating in public tenders, and also to agree not to prosecute Odebrecht in the future.

The Brazilian company has been at the center of one of the world’s largest corruption scandals for paying billions of dollars in bribes across the region in exchange for public-works contracts.

In Brazil, the far-reaching kickback investigation focusing on Odebrecht has led to prison terms for more than 130 politicians and corporate executives.

The Mexican government has not brought criminal charges against Odebrecht for allegedly paying bribes for public-works contracts, but in actions beginning last December it fined Odebrecht for suspected corruption and barred it from participating in government tenders.

As part of a plea deal with U.S., Brazilian and Swiss prosecutors, Odebrecht and its petrochemicals unit, Braskem, admitted to bribing officials in 12 countries, mostly in Latin America, and agreed to pay $3.5 billion in fines in return for freedom from prosecution. Investigations are ongoing in Mexico, but the attorney general’s office has said it has struggled to access key documents in Brazil.

Brazilian prosecutors say they have been unable to share information because Mexican authorities have declined to promise they will not prosecute company officials based on the information.

The outgoing government of Mexican President Enrique Pena Nieto has faced criticism for failing to bring charges against Odebrecht, although the company told U.S. and Brazilian prosecutors as part of a 2016 settlement that it paid $10 million worth of bribes in Mexico.

In separate actions between December 2017 and April 2018, Mexico’s public administration ministry (SFP) banned federal and state agencies from working with the firm until 2021 and fined Odebrecht $60 million. The government said the decision related to probes into suspected corruption in Odebrecht’s business with Mexico’s state oil company, Pemex.

In the document seen by Reuters last week, Odebrecht offered to pay damages and provide information on at least three contracts signed between 2010 and 2014 that are under investigation in Mexico.

“(Odebrecht is offering) extensive cooperation by the company and damage reparations of $18 million,” the document said.

Odebrecht requested the deal be kept confidential and that both the attorney general’s office and the SFP agree not to bring future cases against the company, according to the document.

The document is not dated. It is unclear when Odebrecht made the offer to Mexico, and when the government rejected the deal. However, the Mexican attorney general’s office received news of the offer in August, according to two government sources.

Odebrecht told Reuters last week that representatives of the company had met with Mexican authorities in recent months to try to reach a deal but “the negotiations did not reach the formalization of an agreement.” The company declined to comment further.

A spokesman for the attorney general’s office said last week that the office has not reached a deal with Odebrecht but declined to comment further. The SFP declined to comment.

The SFP declined to participate in the agreement because it does not oversee criminal matters, according to a separate person with knowledge of the matter. Without the SFP, the attorney general’s office would have little leverage to reach a deal with Odebrecht, both of the people with knowledge of the matter said.

The two government sources told Reuters they believe it unlikely that Mexico will reach an agreement with Odebrecht before the administration of President-elect Andres Manuel Lopez Obrador begins in December.

Reporting by Diego Ore and Lizbeth Diaz; Writing by Julia Love; Additional reporting by Brad Brooks in Sao Paulo; Editing by Matthew Lewis

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