The IDB has announced the debarment of Construcap CCPS Engenharia e Comércio S.A. (Construcap) for 18 months in connection with allegations of corrupt and fraudulent practices relating to the execution of a roads construction contract under the Mario Covas Rodoanel Project - Northern Section. The debarment makes Construcap ineligible to participate in projects and operations financed by the IDB Group and follows an investigation by the Office of Institutional Integrity (OII), with the full cooperation of Construcap.

The sanction is the result of a Negotiated Resolution Agreement (the “Settlement”) between the IDB and Construcap in accordance with the IDB Group’s Sanctions Procedures. As part of the Settlement, Construcap admitted to making illicit payments in 2013-2015 totaling approximately US$1 million to a public official involved in the supervision and management of the contract. According to OII’s findings, the public official demanded payments through a designated subcontractor. A Construcap manager authorized said payments based on the impression that a failure to pay would result in unjustified delays in approvals for contract-related disbursements due during the execution of works. Additionally, to conceal the illicit payments, the company also misrepresented certain project expenses and activities.

In response to a national investigation, the company proactively investigated these facts, self-disclosed them to Brazilian authorities at an early stage, and ultimately agreed with the authorities to restitute funds and pay fines of R$3,841,592. These facts, along with the company’s full cooperation with OII, were reflected in a significantly reduced sanction.

Under the terms of the Settlement, Construcap commits to report on its compliance program through an independent compliance consultant and to continue its cooperation with OII. In the event Construcap fails to fulfill its obligations, the sanction will continue until the conditions are met, or until six years and six months from the effective date of the settlement, whichever occurs earlier.

The debarment of Construcap qualifies for cross-debarment by other multilateral development banks (MDBs) under the Agreement for Mutual Enforcement of Debarment Decisions that was signed on April 9, 2010.