IADB debars Brazil's AG Engenharia over illicit payments

The Inter-American Development Group has debarred Brazilian conglomerate Andrade Gutierrez Engenharia for three years and one month. 

The ban follows an investigation by the Office of Institutional Integrity into prohibited practices committed in IADB-financed projects in Brazil. With credit for a period of voluntary restraint, the debarment period remaining totals two years and six months.  

The sanctions relate to allegations of corrupt practices in connection with four contracts financed by the IADB under the Estrada Nova Watershed Sanitation Program (PROMABEN) and the Igarapes de Manaus Environmental and Social Programs II, Supplemental and III (PROSAMIM) in Brazil. 

AG Engenharia agreed to make illicit payments to government officials in exchange for the award of contracts. Specific to PROSAMIM, between 2009 and 2012, AG Engenharia agreed to pay government officials between 5-10% of each contract amount and a one-off payment equivalent to approximately $11.8 million. Based on the values of the underlying contracts, the corrupt payments were potentially as high as $47 million.

In the case of PROMABEN, between 2011 and 2012, AG Engenharia agreed to pay government officials 7% of any contract payment as a kickback. The corrupt payments were potentially as high as $1.9 million.

AG Engenharia made a full disclosure of wrongdoing at an early stage in the investigation, the IADB Group says.