Brazil’s Administrative Council for Economic Defence agreed to let a construction company and an already-convicted employee dodge cartel charges, to obtain its cooperation in the competition enforcer’s investigation of how a nuclear power plant was built.
This is the latest in a series of probes linked to criminal proceedings against energy company Petrobras, which has become embroiled in corruption and bribery scandals.
Construções e Comércio Camargo Correa signed a leniency deal with the authority, known as CADE, on Friday.
In return for full criminal immunity for the company and its current and former employees, it has agreed to cooperate with the investigation into an alleged cartel in the construction of the Angra 3 power plant in the state of Rio de Janeiro in 2013 and 2014.
The deal extends to Dalton dos Santos Avancini, the company’s former president who was convicted of corruption, membership of a criminal organisation and money laundering in July.
The history-of-conduct document released by CADE said Construções e Comércio Camargo Correa took part in bid rigging and dividing the market in the procurement of R$3 billion (€793 million) contracts for electromechanical assembly works both in the nuclear and non-nuclear parts of the power plant.
The document names five other construction companies: Construtora Andrade Gutierrez, Construtora Norberto Odebrecht, Construtora Queiroz Galvão, Empresa Brasileira de Engenharia and Techint.
According to CADE, the companies split into two groups, with the first consortium, known as "G4," submitting the winning bids based on previously fixed prices. The second consortium allegedly offered covering bids after the tender process, and G4 renounced one of the packages to allow the second consortium to win the contract.
Based on the evidence provided by Construções e Comércio Camargo Correa, CADE will now decided whether or not to open administrative proceedings.
Francisco Todorov, partner at Trench Rossi e Watanabe Advogados in Brasilia, said making the leniency agreement public at this stage was "extraordinary".
"It was probably in the interest of the leniency applicant to have the agreement made public. I would be surprised if CADE were to release this information without [the applicant’s] approval," he said.
It is not just the timing of this announcement that is unusual, but also the progress of proceedings.
"Depending on how this criminal investigation develops there may well be more leniency agreements signed, in relation to other markets," Todorov said.
This is the 17th proceeding to result from Lava Jato – Operation Car Wash – a criminal investigation launched in March last year into corruption at Petrobras, a partly state-owned energy company.
The huge number of companies involved led CADE’s president to call the overlapping leniency applications "a huge challenge."
The presidents of six of Brazil's biggest construction companies have all been arrested for bribing Petrobras officials in return for construction contracts. The case has raised questions in Brazil about the company and about the government’s management of public assets. Petrobras controls Brazil’s largest oil fields.
Ademir Pereira, at Advocacia José Del Chiaro in São Paulo, said that although not explicitly stated, this latest leniency application could help Correa gain leniency if they also provide more information to the Lava Jato investigation.
Magalhães e Dias partner Francisco Niclós Negrão in São Paulo said it was interesting to see the Petrobras case start to affect CADE’s work.
"CADE has already been focusing on bid rigging for a few years," he said. "It is natural there will be many antitrust investigations spurred by the Petrobras case. I would be surprised if this is the last case."
Counsel to Construções e Comércio Camargo Correa
Levy & Salomão Advogados
Partner Ana Paula Martinez in São Paulo
