Brazil police raid offices of major builders in railway probe

BRASILIA (Reuters) - Brazil’s federal police on Thursday raided the offices of at least 12 builders to seek evidence of a cartel handling railway projects, antitrust watchdog Cade said.

Cade did not specify where the raids were conducted but said police suspected some of Brazil’s largest construction companies, including Odebrecht SA, OAS SA and Andrade Gutierrez SA, were active members of the cartel. All have been linked to corruption at oil projects.

The probe, which started in February, is based on testimony from plea and leniency deals with construction firm Camargo Correa SA, one of the targets of an investigation into price-fixing at state-run oil company Petroleo Brasileiro SA, or Petrobras.

A spokeswoman for Andrade Gutierrez said the company would continue to collaborate with investigations. OAS and Odebrecht declined to comment. Representatives of Camargo Correa did not immediately respond to requests for comment.

According to Cade, the railway cartel was active since 2000 and might have involved up to 37 companies. The agency said there were strong signs that the builders colluded to raise the price of key projects such as the North-South railway, a long-delayed project that would ease shipments of corn and soybeans.

Police said in February that Camargo Correa admitted to bribing the former president of state-run Valec, which was responsible for building the railways.

The confession was part of a settlement with prosecutors last year in which it agreed to pay more than 800 million reais ($247.66 million) in fines and indemnities.

Dozens of executives from Brazil’s largest engineering firms have been jailed for colluding to overcharge Petrobras and using the proceeds to bribe the oil company’s executives and politicians, many of whom are part of interim President Michel Temer’s coalition.

The North-South railway, a 1,550-kilometer (963-mile) set of tracks stretching from the interior state of Goias to the coastal state of Maranhão, was started in the 1980s and is not yet entirely operational.

The Temer administration plans to grant a northern stretch of the railroad, between Barcarena and Itaqui, to a private operator, Transport Minister Mauricio Quintella said on Tuesday.

($1 = 3.2303 Brazilian reais)

Reporting by Silvio Cascione; Editing by Lisa Von Ahn and Bernadette Baum