On March 18, 2022, the Inter-American Development Bank (IDB) announced the three-year debarment of Mexico-based construction company Construtora COESA SA (formerly known as Construtora OAS SA) for allegedly engaging in (1) “collusive and corrupt practices” in connection with the São Bernardo do Campo Urban Transportation Program II and (2) participating in “a corrupt practice” in connection with the Mario Covas Rodoanel Project – North Section.
According to Construtora COESA’s own admissions regarding the São Bernardo project, in 2012 and 2013 the company arranged for another company to submit a bid higher than Construtora COESA’s in order to create the appearance of competition for a contract. Construtora COESA also “failed to act upon the knowledge of corruption underlying the award of the contract to Construtora OAS SA and its joint venture partner.” With respect to the Mario Covas Rodoanel Project, in 2013 and 2014 Construtora COESA made $1.7 million in illicit payments to public officials “involved in the supervision and management of two contracts.” Payments were made both directly and through a subcontractor.
The debarment was imposed as part of a Negotiated Resolution Agreement between Construtora COESA and the IDB. The IDB stated that Construtora COESA received a “significantly reduced sanction” because (1) of the company’s cooperation beginning at the earliest stage of the investigation and (2) the company’s parent company entered into 2019 settlement with Brazilian authorities that related to this conduct and other matters. Under the settlement with Brazilian authorities, Construtora COESA’s parent company paid approximately $460 million in fines and restitution.
Under the terms of the settlement with the IDB, Construtora COESA and 26 of its subsidiaries are debarred for three years during which time they are ineligible to participate in IDB-financed operations and projects. Construtora COESA also agreed to continue its cooperation with IDB investigators and committed to submitting reports on its compliance program to the IDB through an existing independent monitorship. If Construtora COESA fails to fulfill its obligations under the settlement agreement, the debarment will continue until conditions are met or for eight years from effective date of the settlement, whichever occurs sooner.