The IDB has announced the debarment for three years of Construtora COESA S.A. (formerly known as Construtora OAS S.A.). The debarment is in connection with allegations of collusive and corrupt practices relating to the execution of road construction contracts under the São Bernardo do Campo Urban Transportation Program II and a corrupt practice relating to the Mario Covas Rodoanel Project - Northern Section.
The debarment makes Construtora COESA ineligible to participate in projects and operations financed by the IDB Group and follows an investigation by the IDB’s Office of Institutional Integrity (OII), with the cooperation of Construtora COESA. The debarment is the result of a Negotiated Resolution Agreement between the IDB and Construtora COESA in accordance with the IDB Group’s Sanctions Procedures.
According to admissions made by Construtora COESA with respect to the São Bernardo project, in 2012 and 2013 the company arranged the submission of a cover bid by another company in order to simulate competition for a contract, and failed to act upon the knowledge of corruption underlying the award of the contract to Construtora OAS S.A. and its joint venture partner. Regarding the Rodoanel Norte project, in 2013 and 2014 Construtora COESA made illicit payments totaling approximately $1.7 million to public officials involved in the supervision and management of two contracts. The illicit payments were made directly to the officials or through a designated subcontractor.
Construtora COESA expressed its intent to cooperate with the investigation and to disclose the prohibited practices at the earliest stage of the investigation. Separately, in 2019, Grupo OAS (which controlled Construtora OAS S.A. at the time) reached a settlement with Brazilian authorities on these and other matters that resulted in payment of fines and restitution of funds for approximately $460 million in total. These facts, along with the company’s early cooperation with OII, were reflected in a significantly reduced sanction.
In addition to the sanctions against Construtora COESA, 26 subsidiaries will be subject to debarment for the same time period.
Under the terms of the Settlement, Construtora COESA commits to report on its compliance program through an existing independent monitor and to continue its cooperation with OII. In the event Construtora COESA fails to fulfill its obligations, the sanction will continue until the conditions are met, or until eight years from the effective date of the Settlement, whichever occurs earlier.
The debarment of Construtora COESA 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.
About the IDB Group
The IDB Group is the leading source of development finance for Latin America and the Caribbean. It helps to improve lives by providing financial solutions and development know-how to public and private sector clients. The Group comprises the IDB, which has worked with governments for more than 60 years; IDB Invest, which serves the private sector; and IDB Lab, which tests innovative ways to enable more inclusive growth.
The Office of Institutional Integrity (OII) has a central role in the IDB Group’s commitment to integrity through its mandate to conduct investigations of Prohibited Practices and provide prevention support to operational units.