Odebrecht SA’s Chief Executive Officer Marcelo Odebrecht said his family’s Brazilian conglomerate relied on then-President Luiz Inacio Lula da Silva to open the way for business in Cuba.
Odebrecht SA, owner of Latin America’s biggest builder, led construction of the $1 billion Mariel port in the Communist island that was funded by subsidized loans from Brazil’s development bank. Now its Cuba operations, and the way they were financed, are facing scrutiny back home.
Federal prosecutors have opened a preliminary influence-peddling inquiry into whether Lula used his connections to persuade the development bank to provide subsidized lending for Odebrecht projects. After stepping down as president, Lula has flown on Odebrecht jets on speaking tours abroad sponsored by the firm, the CEO said.
“It’s the only country where, in fact, we opened and grew under the Lula government, and where we have to say that relationship with Lula helped a lot,” Odebrecht, 46, said in an interview on April 27. He denies any wrongdoing, saying that there aren’t grounds for an investigation and the inquiry by prosecutors is only a “request for clarification.”
The ex-president no longer held public office when he traveled with Odebrecht and he has done speaking engagements for companies from several industries, Paulo Okamotto, president of Lula’s foundation, known as Instituto Lula, said in a statement.
BNDES said on its Facebook page that Lula didn’t interfere in the bank’s decisions and that its loans were approved in an independent process involving the bank’s experts. The lender said that, like credit export agencies in other countries, it finances exports to create jobs at home and help Brazilian companies compete abroad.
Congress also may investigate loans by the Rio de Janeiro-based lender. Opposition lawmakers rounded up enough signatures for an inquiry into the development bank’s lending for projects including Mariel, and both chambers have approved a measure to remove banking secrecy that protects BNDES loans.
The bank’s President Luciano Coutinho told senators last month he cannot reveal details of the loans because they are protected by banking secrecy. Odebrecht received 5.5 billion reais ($1.8 billion) of BNDES financing from 2009 to 2014 to fund projects abroad, more loans from the bank than any other Brazilian company except for the aircraft maker Embraer.
Taxpayers are given little information about loans by the Treasury-owned bank that are often subsidized, said Sergio Lazzarini, professor at Insper business school in Sao Paulo and co-author of a book about BNDES.
“The government and BNDES should clarify two things,” he wrote in an e-mail. “First, what are the real costs of the subsidies and do their potential benefits compensate for their costs? Second, what is the criteria to choose country A or firm X versus country B or firm Y?”
Odebrecht said his family’s group wasn’t the only Brazilian company that benefited from Lula opening Cuba. Odebrecht led about 400 Brazilian companies that contributed to building the Mariel port, which was inaugurated in January. The port sits outside the sleepy town of Mariel where horse-drawn carriages jostle for space with container trucks on mud roads. Idle cranes are painted the bright green found on the Brazilian flag.
“When the relationship between Cuba and the U.S. is totally normalized, it’s natural for Cuba to have growth in tourism, investment, everything,” Odebrecht said. “We don’t go into countries to do one project and leave. Our intention is to grow our roots in Cuba.”
The company plans to benefit from the opening of the Caribbean nation’s economy after beating a 2012 Florida law that bans governments from doing business with companies that maintained ties with Cuba.
Odebrecht’s challenge of a state law in Florida to bar government agencies from entering into contracts worth $1 million or more with companies that do business in Cuba led to it being blocked in appeals court in 2013. Odebrecht has won billions of dollars of U.S. contracts since 1990, including work on a Miami International Airport terminal and the Miami Heat’s American Airlines arena.
The Mariel port is supposed to be a hub for ships coming out of the Panama Canal with goods for the U.S. and Caribbean. While the embargo is in place, boats stopping in Cuba can’t dock in a U.S. port for months.
While the Mariel port was part of Lula’s effort to “plant the Brazil flag in Cuba,” the participation of companies such as Odebrecht explains why Brazil would make such a large investment that seemed like a loser until U.S. President Barack Obama and his Cuban counterpart Raul Castro agreed to normalize relations in December, said Peter Hakim, president emeritus for the Inter-American Dialogue in Washington.
“The Mariel investment sure looks better now than it did when Brazil committed to it,” Hakim wrote in an e-mail.
Now that the port is built, Odebrecht is focusing on its contract to boost productivity in Cuban sugar mills.
“If we chose to go to Cuba, it’s because we’re also looking at other work, like sugar,” Odebrecht said. “Given the distance to the U.S., it’s a country that will grow a lot in the next few years.”
Helio Piza is the head manager of the Fifth of September sugar plant in the town of Rodas, in Cuba’s Cienfuegos province. It is the only privately-managed sugar plant in Cuba since the Revolution.
Piza, who works for Odebrecht’s Cuban subsidiary Cia. de Obras de Infraestructura, said his plans to double the plant’s production to 10,000 tons per day within five years hinge on BNDES financing. The loan will be paid off with sugar, he said.
“It was part of the agreement between Raul Castro and Lula,” Piza said in an interview at the plant in December. “Lula has asked us to come and help him here, to bring the technology and help development. It was then that we began to talk with Cuba, and create a contract model that allows for the transfer of technology.”
Fonte: Bloomberg – 05/05/2015