Next Mexico government may freeze out graft-tainted Odebrecht: officials

MEXICO CITY (Reuters) - Odebrecht, the Brazilian construction company at the center of a far-reaching Latin American bribery scandal, may be blocked from participating in public works projects under the next Mexican government, incoming administration officials said.

The corporate logo of the Odebrecht SA construction conglomerate is pictured at its headquarters in Sao Paulo, Brazil August 3, 2018. REUTERS/Paulo Whitaker

The outgoing government of President Enrique Pena Nieto has faced criticism for not bringing charges against Odebrecht [ODBES.UL], even though the company told U.S. and Brazilian prosecutors that it paid $10 million worth of bribes in Mexico.

The scandal surrounding Odebrecht, which investigators began uncovering in 2014, led to the firm paying $3.5 billion in settlements in the United States, Brazil and Switzerland.

“Odebrecht certainly will not have any invitation to participate in public works (in Mexico),” incoming communications and transportation minister Javier Jimenez Espriu said in an interview on Wednesday, vowing “zero tolerance” on corruption.

Odebrecht’s Mexico unit declined to comment. Its head office in Sao Paulo did not respond to a request for comment.

Incoming president Andres Manuel Lopez Obrador, who takes office in December, spent years railing against corruption in Mexico and vowed to clean up government if elected.

Mexico banned Odebrecht in December for bidding for federal public contracts for four years after finding that an affiliate had made an “incorrect charge” of $6.20 million in a contract with state oil company Pemex.

In April, it banned federal and state agencies from working with the firm until 2020 and fined Odebrecht $60 million. The government said the decision related to probes into suspected corruption in Odebrecht’s business with Pemex.

Pena Nieto’s administration has been rocked by a series of corruption scandals. Emilio Lozoya, the man he first appointed to run Pemex, was linked last year to the Odebrecht payments scandal by media investigations in Brazil and Mexico.

Lozoya has denied any wrongdoing. Mexico’s attorney general launched a probe into the Odebrecht case, which concluded last year. The findings have not been made public.

Irma Sandoval, the next head of the Public Administration Ministry, which imposed the bans on Odebrecht, said on Thursday Lopez Obrador’s government may prohibit the company from making public bids, without providing details.

“We’re considering prohibiting the participation of future bids from corrupt companies like Braskem, Odebrecht and many more,” she told Reuters in an interview.

Brazilian petrochemical firm Braskem BRKM5.SA pleaded guilty to a conspiracy charge over a scheme involving Odebrecht and was sentenced to pay a $632.6 million criminal fine.

“The (government) and Mr. Lopez Obrador will ... establish specific norms so the corrupt are shut out,” Sandoval said.

Writing by Michael O’Boyle and Daina Beth Solomon; Editing by Paul Tait