Skip to main content

Odebrecht Reaches Settlement Agreement with IDB Group Resulting in Sanctions

Sanctions include debarment and contributions of US$50 million to go to NGOs and charities serving vulnerable communities in IDB member countries

Following an extensive investigation by the Office of Institutional Integrity (OII, an independent office of the Inter-American Development Bank), with the cooperation of the Brazilian company Odebrecht S.A. (Odebrecht), OII announced today the debarment of CNO S.A. (CNO), a subsidiary of Odebrecht, for six years in connection with prohibited practices in two IDB-financed projects. The debarment makes CNO ineligible to participate in IDB Group-financed projects.

The OII investigation uncovered bribes paid in two IDB-financed projects: the Tocoma Hydroelectric Power Plant Program in Venezuela and the Highway Rehabilitation Program in the State of São Paulo in Brazil.

As part of the Settlement, Odebrecht does not contest the evidence obtained by OII demonstrating that in both projects CNO committed corrupt practices when it made payments to public officials in order to facilitate either the award, contract execution payments and/or contract amendments.

According to OII’s evidence, the illicit payments amounted to upward of 5-6% of each contract amount, including amendments. Specific to the Highway Rehabilitation Program, between 2006 and 2008, CNO paid government officials a total amount equivalent to approximately US$380,000. In the case of the Tocoma Hydroelectric Power Plant Program, evidence obtained by OII indicates that between 2007 and 2015, illicit payments and transactions of up to US$118 million were made utilizing a complex network of agents and offshore financial payment schemes.

The sanctions are the result of a Negotiated Resolution Agreement (the Settlement) between the IDB, the Inter-American Investment Corporation (IDB Invest) and Odebrecht on behalf of its subsidiaries, CNO and Odebrecht Engenharia e Construção S.A. (OEC). The Settlement also includes a conditional non-debarment applied to OEC for ten years and CNO for four years directly following CNO’s six-year period of debarment. When conditionally non-debarred, a company remains eligible to participate in IDB Group-financed projects but only if it fully meets the conditions of the Settlement. If any of the conditions are not met, the company will be debarred.

As part of the sanctions, Odebrecht commits to make a total contribution of US$50 million, starting in 2024, directly to NGOs and charities managing social projects with the purpose of improving the quality of life of vulnerable communities in the IDB’s developing member countries.

In addition to the sanctions against CNO and OEC, 19 CNO subsidiaries will be subject to debarment and a further 41 OEC subsidiaries will be subject to conditional non-debarment. CNO branches in Africa are excluded from the sanction. Separately, the Odebrecht group commits to comply with certain conditions necessary to demonstrate its reforms.

The Settlement allows for a reduced period of debarment in light of Odebrecht’s continued cooperation, including internal investigations that are intended to uncover systemic integrity risks to IDB Group-financed activities. Under the terms of the Settlement, Odebrecht commits to report on its compliance program through an independent monitor.

The Settlement was negotiated by OII in accordance with the IDB Group’s Sanctions Procedures. Settlements of this nature are used by the IDB Group and other multilateral development banks as an effective means to resolve investigations related to prohibited practices in exchange for cooperation and disclosures of systemic integrity risks. 

The debarment of CNO and listed subsidiaries 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.

For additional information on the IDB’s Office of Institutional Integrity and its sanctions system, please click here.

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 60 years; IDB Invest, which serves the private sector and IDB Lab, which tests innovative ways to enable more inclusive growth.



Turner, Taos Lee

Turner, Taos Lee
Jump back to top