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Colombia’s sic levies sanctions of $84.4 million usd on Odebrecht and other players for antitrust in “ruta del sol ii”

Colombia’s sic levies sanctions of $84.4 million usd on Odebrecht and other players for antitrust in “ruta del sol ii”

28 Diciembre, 2020

•    Colombia’s Superintendence of Industry and Commerce (SIC), the country’s sole Competition Authority, identified antitrust practices in “Ruta del Sol II” and in a unanimous decision by its Advisory Board sanctioned  ODEBRECHT in Colombia, CORFICOLOMBIANA, EPISOL and the CONCESSIONARY COMPANY, as well as 4 natural persons, for collaborating, facilitating, authorizing and implementing these anti-competitive practices. 

•    GABRIEL IGNACIO GARCÍA MORALES (former Vice Minister of Transport and Acting Director of the National Concessions Agency – INCO, and National Roads Agency – INVIAS at the time) aided the investigation as a whistleblower, whereby he confessed to his participation and shared information about the anti-competitive practices.

Bogotá D.C., 28 December 2020. Colombia’s Superintendence of Industry and Commerce (SIC), in its capacity as the sole National Competition Authority, sanctioned 
CONSTRUTORA NORBERTO ODEBRECHT S.A.; ODEBRECHT PARTICIPAÇÕES E INVESTIMENTOS S.A. (jointly with ODEBRECHT); CORPORACIÓN FINANCIERA COLOMBIANA S.A. (CORFICOLOMBIANA); ESTUDIOS Y PROYECTOS DEL SOL S.A.S. (EPISOL); CONCESIONARIA RUTA DEL SOL S.A.S. EN LIQUIDACIÓN (CONCESSIONARY COMPANY) and GABRIEL IGNACIO GARCÍA MORALES and 4 natural persons (including ODEBRECHT executives), for devising and implementing anti-competitive practices during the bidding process for “Ruta del Sol II’. 

In the first phase, this included an antitrust agreement which guaranteed the awarding of Concession Contract No. 001 of 2010 to the CONCESSIONARY COMPANY; and, in the second phase, a series of reimbursements and irregular payments via different contracts which allowed for the division of costs from the antitrust agreement and at the same time establish a compensation scheme via further contracts which allowed them to extract as much as money as possible from the “RUTA DEL SOL” project.

Following a unanimous decision by the SIC’s Advisory Board, held on 2 December 2020, the following sanctions were levied by Colombia’s Superintendence of Industry and Commerce:
 

 

 

SANCTIONS LEVIED BY COLOMBIA’S SUPERINTENDENCE OF INDUSTRY AND COMMERCE

MARKET AGENTS

1

CONSTRUTORA NORBERTO ODEBRECHT S.A.

$25,124,807 USD $87.780.299.178 COP

2

ODEBRECHT PARTICIPAÇÕES E INVESTIMENTOS S.A.

$25,124,807 USD $87.780.299.178 COP

3

CORPORACIÓN FINANCIERA COLOMBIANA S.A. (CORFICOLOMBIANA)

$15,903,944 USD $55.564.723.500 COP

4

ESTUDIOS Y PROYECTOS DEL SOL S.A.S. (EPISOL)

$9,681,991 USD $33.826.650.000 COP

5

CONCESIONARIA RUTA DEL SOL S.A.S. EN LIQUIDACIÓN, (CONCESSIONARY COMPANY)

$63,391 USD $221.475.540 COP

6

GABRIEL IGNACIO GARCÍA MORALES

(Exonerated 100% for participation as a whistleblower)

$7,541,761 USD $26.349.180.000 COP

NATURAL PERSONS

1

LUIZ ANTONIO BUENO JUNIOR (ODEBRECHT)

$502,495 USD $1.755.603.135 COP

2

LUIZ ANTONIO MAMERI (ODEBRECHT)

$351,762 USD $1.228.975.605 COP

3

YEZID AUGUSTO AROCHA ALARCÓN (ODEBRECHT)

$53,098 USD $185.512.470 COP

4

JOSÉ ELÍAS MELO ACOSTA (CORFICOLOMBIANA)

$112,769 USD $393.991.455 COP

TOTAL SANCTIONS

$84,460,828 USD

$295.086.710.061

 

*Conversion according to the rate provided by Colombian Bank of the Republic on 26 December 2020 (1USD=3,493)

BACKGROUND TO THE CASE

GABRIEL IGNACIO GARCÍA MORALES was the whistleblower in the SIC’s investigation, where he confessed to his participation in antitrust practices during the structuring, adjudication and implementation of “RUTA DEL SOL II”.

Additionally, the SIC’s investigation corroborated the evidence of ODEBRECHT’S corruption in their Plea Agreement with the USA’s Department of Justice (21 December 2016), which demonstrated the complex corruption scheme which ran for over a decade and resulted in the payment of hundreds of millions of dollars in bribes in different countries via their ‘Division of Structured Operations’ which served as an independent bribery department, reporting to the highest levels of the company to authorize the payment of bribes which were paid via a complicated network of shell companies, off-the-books accounting and off-shore bank accounts.   

The SIC also uncovered antitrust between ODEBRECHT, CORFICOLOMBIANA and EPISOL, whereby they facilitated anti-competitive practices to guarantee that the concession contract Contrato de Concesión No. 001 de 2010 was awarded to the CONCESSIONARY COMPANY; and subsequently manipulated contracts to secure different reimbursements and irregular payments that enabled them to divide the costs of the antitrust agreement and at the same time establish a compensation scheme in order to extract as much money as possible from the “RUTA DEL SOL II” project. 
    
This anti-competitive system was designed and implemented by ODEBRECHT as part of a global corruption scheme, which lasted over a decade and resulted in the payment of hundreds of millions of dollars in bribes in different countries.
 
ODEBRECHT, CORFICOLOMBIANA and EPISOL identified GABRIEL IGNACIO GARCÍA MORALES’ privileged position with regard to being able to influence decisions taken in the ‘RUTA DEL SOL’ project, and therefore focused their efforts on how to bribe him and secure his participation in the implementation of their anti-competitive practices. This led to a series of secret, illegal meetings where the anti-competitive agreement was defined with García Morales economically recompensed in return for ensuring that Contrato de Concesión No. 001 de 2010 was awarded to the CONCESSIONARY COMPANY without any evaluation of its financial proposal and without competitive pressure, thereby limiting the free participation of other competitive bids.

Once the deal had been agreed with GABRIEL IGNACIO GARCÍA MORALES, ODEBRECHT and CORFICOLOMBIANA worked out how the implementation of Contrato de Concesión No. 001 de 2010 — via the construction consortium CONSOL— would allow for the costs of the agreed economic remuneration would be divided; a sum which amounted to SIX AND A HALF MILLION DOLLARS (6,500,000 USD), which was initially paid by ODEBRECHT.

The payments to GABRIEL IGNACIO GARCÍA MORALES for his participation in the anti-competitive bidding agreement were scheduled between March and September using the codename Coast. These payments were made via ENRIQUE JOSÉ GHISAYS MANZUR and the company LURION TRADING INC., and were wired by ODEBRECHT’S ‘Division of Structured Operations’ using unaccountable, offshore funds.

This demonstrated ODEBRECHT’S modus operandi with the anti-competitive system used during the first phase, which was deployed using a highly sophisticated, illegal model that conveniently made use of the pre-established company structure, which allowed for the specific division of roles and responsibilities, which ultimately led to illegal conduct unequivocally linked to antitrust. 

Further anti-competitive practices were revealed following the award of Contrato de Concesión No. 001 de 2010, via a series of reimbursements and irregular payments, alongside a compensation strategy facilitated by additional contracts, all of which were dependent upon the success of the first phase whereby the CONCESSIONARY COMPANY won the bid.

This shows that ODEBRECHT, CORFICOLOMBIANA and EPISOL devised a system of reimbursements and irregular payments in a bid to divide the costs associated with the initial anti-competitive agreement for the implementation of Contrato de Concesión No. 001 de 2010 by CONSOL and the CONCESSIONARY COMPANY. 

ODEBRECHT, CORFICOLOMBIANA and EPISOL used different, unjustified contracts to divert resources from the implementation of Contrato de Concesión No. 001 de 2010, as a form of reimbursement for the payment made to GABRIEL IGNACIO GARCÍA MORALES for the anti-competitive agreement, which was made via the Spanish company DCS MANAGEMENT through payments made by CONSOL.

The SIC also uncovered that between 1 August 2010 – 10 November 2017, the managers of CONSOL and the “Comptroller” of the CONCESSIONARY COMPANY identified irregular, unjustified and unsupported payments with regard to ‘additional studies’ in the preparation of the bid in the first phase - DCS MANAGEMENT – and subsequently, once the contract had been awarded, for works not associated with the implementation of the project. Information about these payments were made known to JOSÉ ELÍAS MELO ACOSTA, President of CORFICOLOMBIANA at the time.

Plans to ensure the successful addition of clauses to Contrato de Concesión No. 001 de 2010 were also uncovered, which led to further investigation of the various reimbursements and irregular payments by ODEBRECHT, CORFICOLOMBIANA and EPISOL during the second phase of their anti-competitive activity, which deployed a similar strategy to that deployed during the bidding process for Contrato de Concesión No. 001 de 2010, with a view to illegally exploiting additions to the contract in order to ensure maximum financial gain from the “RUTA DEL SOL II” project. 

Specifically, the strategy was focused on the successful addition of “TRANSVERSAL RIO DE ORO-AGUACLARA-GAMARRA, CORRESPONDING TO PHASE 8 OF SECTOR 2 OF THE RUTA DEL SOL ROADS PROJECT”, which was entrusted to OTTO NICOLÁS BULA BULA to manage and secure, ensuring that the CONCESSIONARY COMPANY would be granted the work without being required to participate in a freely competitive public bid. 

It was agreed that OTTO NICOLÁS BULA BULA would receive reimbursement equivalent to 1% of the value of the addition, amounting to FOUR MILLION SIX HUNDRED THOUSAND DOLLARS ($4,600,000 USD). As was the case with the payment to GABRIEL IGNACIO GARCÍA MORALES in the first phase, the payments were made into the accounts of foreign companies using unaccountable, offshore funds.

Finally, the SIC uncovered that a series of meetings between the main protagonists of the anti-competitive system where they sought to devise new strategies to conceal the payments to GABRIEL IGNACIO GARCÍA MORALES, thereby ensuring the continuation of their anti-competitive practices – which were still in full swing. 

The SIC’s decision was taken following an exhaustive investigation by its Antitrust Division, which was subsequently presented to its Advisory Board. At all times, the rights of those being investigated were respected, upheld and guaranteed, due process was followed and following the presumption of innocence was applied. All of the evidence was collected and assessed as a whole, including the denunciation and collaboration of GABRIEL IGNACIO GARCÍA MORALES.

APPEAL

The decision can be appealed before the Superintendent of Industry and Commerce.

ENDS

For further information please contact:

Paola Casallas: +57 311 454 8534 / casallas@sic.gov.co

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