On August 11, 2022, the Inter-American Development Bank (IDB) announced the 18-month debarment of Brazilian construction company Sociedad Anónima de Obras y Servicios Copasa do Brasil (Copasa do Brasil) for failing to report being solicited for a bribe and for participating in a consortium in which Copasa Do Brasil’s consortium partner paid bribes in connection with work on a roads construction contract financed by the IDB.
According to the Office of Institutional Integrity (OII) of the IDB, Copasa do Brasil was a member of a consortium working on the Mario Covas Rodoanel Project – Northern Section in Brazil. OII found that between 2013 and 2015, the other entity in the consortium made approximately $1 million in illicit payments to a public official involved in the management of the contract, based on the understanding that a failure to pay would result in delayed approvals for contract-related disbursements. The OII reported that the payments were made to a subcontractor designated by the public official. In an effort to further conceal the payments, OII found that the consortium also “misrepresented certain project expenses and activities.”
OII stated that prior to these improper payments being made, a Copasa do Brasil manager was “aware of the public official’s bribe solicitations,” but refused to pay the bribes. OII further found that the manager failed to report the solicitation believing that his refusal alone would prevent the improper payments from being made. Several years later, the Copasa do Brasil manager discovered that the other consortium partner had made the illicit payments.
IDB and Copasa do Brasil entered into a Negotiated Resolution Agreement that reflected a “significantly reduced sanction” based on the company’s full cooperation with the OII and a settlement that Copasa do Brasil had reached with Brazilian authorities, which included paying restitution and fines. In addition, as part of the IDB settlement, Copasa do Brasil did not contest its role in the actions taken by the consortium, including the finding that a “senior [Copasa do Brasil] manager failed to act to prevent” the bribes.
As part of the settlement, Copasa do Brazil agreed to an 18 month debarment, which prevents the company from participating in other projects and operations funded by the IDB or other multilateral development banks. Copasa do Brasil also agreed to continue its full cooperation with the IDB and provide reports on its compliance program to the IDB “through an independent compliance consultant.” If the company fails to meet its settlement obligations, the debarment will continue until the conditions are met or for 6 years from the effective date of settlement, whichever comes first.