On October 30, Spain’s National High Court, the Audiencia Nacional, formally charged Spanish construction company Fomento de Construcciones y Contratas, S.A. (FCC) with corruption and money laundering in connection with €82 million ($92 million) in payments that FCC allegedly made in Panama. The charges, which are directed at three FCC entities, relate to allegations that FCC paid bribes to obtain metro and hospital contracts in Panama between 2010 and 2014.
An Audiencia Nacional release stated that its investigation began in 2017, after a complaint against a legal advisor of Brazilian construction company Odebrecht for possible violations of money laundering, bribery, and criminal organization committed between 2009 and 2015. According to the release, Odebrecht used Spanish companies to launder amounts from bribes paid by various construction companies, in exchange for contract awards. In particular, the Spanish Anti-Corruption Prosecutor’s Office asserted that the three FCC companies “constituted a consortium” with Odebrecht as its leader, to participate in public-contract awards in Panama. That consortium succeeded in winning contracts for two Panamanian metro lines.
By “oversizing the supply of steel needed to build the Panama metro and billing it at double its price,” the release stated, the companies obtained funds “to pay gifts to employees and political leaders of Panama.” The diversion of these funds “was done through screen companies managed by FCC and Odebrecht executives.”
The release also stated that after analyzing the documentation in the case, Audencia Nacional Judge Ismael Moreno determined that there are indications that the three FCC companies were able to participate in events that may constituting crimes of corruption in international transactions (under article 286 ter of the Spanish Penal Code (CP) and money laundering (under PC articles 301 and 302.2). Judge Moreno also noted that there are indications that several senior FCC executives (since dismissed) participated “in the alleged corruption agreements regarding 13 infrastructure works that tendered in Panama, Costa Rica, Salvador and Nicaragua.”
Judge Moreno also took note of the fact that in In May and June 2019, FCC filed two complaints with the Anti-Corruption Prosecutor about the commercial agreements relating to the facts under investigation. In particular, FCC provided 38 invoices and transfers totaling €82,768,849 between 2010 and 2014 “for services not provided, according to the company, and to cover payments for alleged corruption.” Nonetheless, Judge Moreno concluded that criminal responsibility should extend beyond the former FCC executives because FCC “did not activate or apply any protocol aimed at preventing the commission of criminal acts, nor effectively implemented appropriate control or reaction mechanisms to detect criminal actions committed within the company .”
In an October 31 statement, the Barcelona-based company reported that it was aware of the alleged corruption, which had occurred before the new controlling shareholders of FCC took overt in 2015. It stated that FCC has been cooperating with the authorities, and “ratifies its commitment and collaboration with the judicial authorities to clarify the facts.” It also declared that “a total commitment to the principle of zero tolerance for corruption is established” throughout the enterprise.
N.B.: This case provides yet another indication of how far the ripple effects of the Odebrecht scandal continue to be felt. Under the Audencia Nacional’s procedures, FCC was given five days to appoint a representative and an attorney to represent the defendant companies. It seems likely that FCC will now seek to reach some kind of criminal resolution with the Spanish prosecutors and the court, as the fact that current management reportedly had no hand in the alleged Panamanian bribery scheme will not be dispositive of the charges.