State development bank BNDES has temporarily frozen loan disbursements worth $4.7 billion for several major engineering firms ensnared in Brazil’s biggest corruption investigation.
The suspension was enacted in May but only made public on Tuesday by Ricardo Ramos, director of the bank’s exports division. The move blocks funding for builders OdebrechtSA, Grupo OAS SA, Construtora Queiroz Galvao SA, Construtora Camargo Correa SA and Andrade Gutierrez SA.
The decision affects 25 projects worth $7 billion, of which $2.3 billion have already been paid out by BNDES in projects in Argentina, Cuba, Venezuela, Guatemala, Honduras, the Dominican Republic, Angola, Mozambique and Ghana, Ramos said.
BNDES’ funding is a target of federal investigators leading the probe at state firms, especially Petroleo Brasileiro SA.
On Monday, prosecutors charged former Brazilian President Luiz Inacio Lula da Silva; former Odebrecht chief executive officer Marcelo Bahia Odebrecht, who is already serving a 19-year sentence for separate corruption charges in the Petrobras case; and nine others over allegations that Lula secured BNDES funding for Odebrecht projects in Angola.
In return, prosecutors said, Odebrecht bribed Lula and some people close to him. Lifting the credit ban would be determined on a “case by case” basis, Ramos told journalists.
“We’re in a difficult moment and we have to take care, as it’s public money, on how we go forward,” Ramos said.
The BNDES move was made after Brazil’s Prosecutor-General’s Office announced earlier this year that it would take legal action so that companies that received financing from the public bank repaid any money involved in the Petrobras kickback scheme, Ramos said.
To get the frozen loans freed, all projects would need to meet new criteria.
That includes proving the project makes physical progress – and the BNDES using satellite monitoring to confirm it; that BNDES was not the sole provider of funds for the work; and the regular monitoring of the evolving credit risks for BNDES funds tied up in each project.
Source: Voice of America.