Brazil builder admits to World Cup stadium cartel in deal with regulator

By Ana Mano

SAO PAULO (Reuters) – Andrade Gutierrez Engenharia SA, Brazil’s second-largest construction firm, has admitted to being part of a cartel for building World Cup soccer stadiums under a leniency agreement with antitrust regulator Cade, the agency said on Monday.

As part of the agreement, Andrade Gutierrez provided evidence implicating five other engineering firms that allegedly colluded in the bidding for contracts to build or renovate stadiums used in the 2014 FIFA World Cup hosted by Brazil, Cade said.

The five firms are Odebrecht Investimentos em Infraestrutura Ltda, a unit of Odebrecht SA [ODBES.UL]; Construções e Comércio Camargo Corrêa SA, a unit of Camargo Correa SA [PMORRC.UL]; Construtora OAS SA [OAS.UL]; Construtora Queiroz Galvão SA; and Carioca Christiani Nielsen Engenharia SA.

Camargo Corrêa said it did not participate in any projects to build stadiums for the World Cup. In a statement to Reuters, Camargo said it signed other leniency agreements with Cade and federal prosecutors “to correct irregularities.”

Carioca, OAS and Odebrecht declined to comment on Andrade’s leniency agreement. Queiroz did not reply to a comment request.

The leniency deal is the seventh struck by Cade with companies that have been blacklisted for involvement in Brazil’s largest corruption scandal centered on state-run oil company Petrobras.

Under a leniency agreement, a company must admit to guilt and provide evidence of wrongdoing by other players in a conspiracy or cartel, potentially exempting it from paying fines.

The new agreement signals tougher regulatory oversight over companies suspected of engaging in anticompetitive practices to win contracts from government or state-run companies.

Cade found evidence of bid-rigging on contracts for five stadiums, including the Maracanã in Rio de Janeiro, Arena Pernambuco near Recife and Estádio Mineirão in Belo Horizonte. The names of two of the five stadiums remain confidential so as not to hamper investigations, Cade said.

Last week, Andrade Gutierrez and Cade announced a leniency agreement as part of a separate bid-rigging probe related to engineering works carried out in Rio de Janeiro shanty towns.

Andrade Gutierrez was responsible for the most expensive arena built for the World Cup, Brasilia’s 70,000-seat Mané Garrincha National Stadium. It was not yet known whether the stadium was subject to bid rigging. It cost more than $800 million at the time, a price tag that helped fuel violent protests.

With no top-tier soccer team, Brasilia, the capital, is struggling to cover the $2.5 million it cost to maintain the stadium, a coliseum-like building that has drawn its biggest crowds for concerts by Paul McCartney and Beyoncé.

(Additional reporting by Anthony Boadle in Brasilia; Editing by Grant McCool and Leslie Adler)