How Odebrecht cozied up to Castros while maintaining work in MiamiBy Kevin G. Hall and Nora Gámez Torres July 31, 2019 07:30 AM, Updated July 31, 2019 11:38 AM
THE BRIBERY DIVISION
Brazilian engineering giant Odebrecht S.A. spent hundreds of millions of dollars in bribes and illicit campaign contributions to win work across the Americas and land itself in trouble with the U.S. Justice Department. Leaked documents show Odebrecht projects in Cuba also generated large unexplained irregular payments.
Over a period from 2010 to 2015, Odebrecht made irregular payments tied to the modernization of the port of Mariel, west of Havana, and the planned expansions of two Cuban airports, for which it had secured more than $800 million collectively from the Brazilian government.
References to these irregular payments all appear in Drousys, an off-the-books accounting platform that Odebrecht’s Structured Operations Division ran via servers in Switzerland. It was a system created to track bribe payments and other spending that it didn’t want to account for in public audits of its finances.
Found amid 13,000-plus Drousys documents is a document whose title references an $8.44 million payment under the English heading “Mariel Port Cuba conquest.”
There are references from 2010 to a “services agreement.” And there are contract “additions” between Companhia de Obras e Infra-estrutura (COI), the Odebrecht subsidiary used to carry out the Mariel project, and an Odebrecht-affiliated Dutch shell company called Likam Bouwwerken International.
Another Drousys document, filed under “Program 2013” and “Cuba,” referenced bank instructions for a $900,000 transaction between CIPSA and ENGETEC, two Odebrecht-controlled shell companies.
These structures are similar to those used by Odebrecht in Ecuador, Peru and Venezuela. Executives from Structured Operations — the so-called Bribery Division — have testified that bribe money in those countries often moved through overpayments, additions to existing contracts and fake contracts between offshore shell companies.
It’s unclear if the numerous references to Cuba reflect efforts to hide payments from auditors, bribes paid to Cuban officials or people back in Brazil who freed up what eventually was $692 million in financing for the Cuban port work from Brazil. Whether top Cuban officials collected bribes might never be known due to the lack of a free press or an independent judiciary in Cuba, the institutions that helped first ferret out corruption in other countries where Odebrecht operated.
The Drousys files were shared with the International Consortium of Investigative Journalists, or ICIJ, which assembled a team of 19 publications in 10 countries, including reporters from the Miami Herald, el Nuevo Herald and the McClatchy Washington Bureau. A first batch of collaborative stories published on June 26 revealed how questionable Venezuelan money flowed into Miami properties and how Bribery Division officials operated out of South Florida.
You’ve Got Mail
Further illuminating Odebrecht’s Cuba business, the Miami Herald-Nuevo Herald-McClatchy team also received Odebrecht emails dating from 2007 to 2015 that chronicle how Odebrecht tried to curry favor with the Castros and keep hidden its dealings with them. The emails were first obtained by the Peruvian investigative website IDL-Reporteros but these had not yet been published.
Odebrecht officials rebuffed repeated requests for comment on why Cuba appears in the parallel accounting system — one so onerous it led the global giant to admit to $788 million in illicit payments across the Americas when it entered into a record corruption settlement with the U.S. Department of Justice in December 2016.
A request for comment from the Cuban Embassy went unanswered.
The man who ran operations for Odebrecht in Cuba from 2012 to 2017, Mauro Hueb, isn’t talking either. Reached by surprise on his cell phone, Hueb dismissively said “I don’t work for that company any longer.”
Asked specifically about Drousys, Hueb answered “this has nothing to do with me.”
Why then did the country in which he ran sensitive operations show up in Drousys?
“I don’t know anything about this,” he said, hanging up when asked about Index Miami Co., a company registered in Miami that he created in 2012, the same year his operations in Cuba provoked fury among Cuban Americans. Through Index Miami Co., Hueb bought a condo in Miami in 2012 for $210,000, selling it in 2018 for $240,000, according to public records.
Hueb was later transferred from Cuba to become Odebrecht’s regional director in Ecuador, a country where Drousys features prominently in a number of ongoing investigations. In an October 2017 interview with the Ecuadorian daily El Universo, Hueb acknowledged bribery allegations against the company had spread like a “metastasis…. We don’t know when it ends.”
It is unclear if Hueb has cooperated with investigators in any country.
Now-convicted CEO Marcelo Odebrecht told Brazilian investigators that he didn’t pay bribes in Cuba. But virtually everything to do with his company’s business foray on the communist island was irregular, including the creative financing eventually employed by the Brazilian Development Bank BNDES to avoid having Odebrecht paid directly by the Cuban government, which might have run afoul with U.S. sanctions.
From the outset, the contract to modernize Cuba’s Mariel port, once used for submarines by the Soviet Union and Cuba, raised eyebrows. It was reached by Brazilian President Luiz Inacio Lula da Silva, himself now serving a corruption sentence, and carried out by his successor, Dilma Rousseff. Current President Jair Bolsonaro, a staunch conservative, promises to release documents showing how his predecessors improperly used the development bank to help Cuba.
According to Marcelo Odebrecht’s depositions to Brazilian prosecutors, both President Lula and his minister of state for development, industry and foreign trade — Fernando Pimentel — played crucial roles in getting Rousseff to approve risky credit to Cuba under “exceptional” conditions, including low interest rates and a 25-year repayment schedule.
Odebrecht emails also show the company plotting to shower members of the Castro family with attention. Raúl Castro was president of Cuba at the time, and remains the head of the Communist Party today even though he stepped down from the presidency in 2018.
Gen. Luis Alberto Rodríguez López-Callejas was of special interest because of his influence in Cuba as the president of Grupo de Administracion Empresaria (GAESA), a military conglomerate controlling most of the Cuban economy. GAESA is currently under U.S. sanction. Mariel’s container terminal was developed by GAESA through a newly created company called Zona de Desarrollo Integral Mariel S.A., or ZDIM.
A member of Castro’s inner circle and his former son-in-law, López-Callejas accompanied by two other GAESA executives visited Brazil in August 2013 on a mission to discuss Odebrecht business in Cuba.
In an email sent in August 2013 to Luis Antonio Mameri, who headed Latin American and African operations for Odebrecht, Hueb said he expected the visit to “reinforce our trust relationship with the Cuban government through his main interlocutor.” He described López-Callejas as in the process of separating from Castro’s daughter but still a man exerting “a strong leadership on decisions taken by the Cuban government [all our business in Cuba passes through his hands].”
And one such decision involved the Mariel contract.
This was documented in the book “Close But No Cigar” by Stephen Purvis, a British architect working with investment firm Capital Coral in the 2000s in Cuba. Along with Dubai Ports World, he developed proposals for the Mariel work and came up with an estimated cost of $350 million for dredging, construction, equipment and working capital.
In an agreement signed by López-Callejas in the Persian Gulf, Dubai Ports World would operate the Mariel port as a joint venture with GAESA. But Purvis said that six months later, the general told him: “Well, in Cuba we don’t like to see the word binding in contracts and we have to cancel the project for reasons of sovereignty. I hope you understand. Please, explain to Dubai.”
Odebrecht soon afterward sealed the deal, eventually billing BNDES about twice what the Purvis deal was going to charge for work that began in late 2010.
Purvis and a dozen other foreign businessmen were imprisoned during an alleged anti-corruption effort led by Castro in 2011 and 2012 in what observers at the time believed was an attempt to avoid debt payments and move business to companies from countries friendly to Cuba.
Odebrecht also tried to use Raúl Castro’s daughter, Mariela — then Cuba’s de facto first lady — to advance its interests on the island.
In an email sent to Marcelo Odebrecht in April 2013, Hueb recommended that he directly seek Mariela Castro’s support for “self-sustainable social projects” on the island aided by Odebrecht. But indirectly, Hueb wrote, the company wanted to use her to send a clear message to her father of “our support to Cuba in the economic modernization of the country.”
Cuba hearts Kim Jong Un
Odebrecht’s support to the Cuban government might have also included ignoring provocative Cuban military activities at a seaport just across the Florida Straits.
In July 2013, months before the Mariel terminal officially opened in January 2014, Panama seized a North Korean vessel called the Chong Chon Gang. It had stopped in Mariel, according to multiple news reports. A United Nations panel of experts later confirmed it was was loaded in Cuba with Soviet-era MiG jet engines, anti-missile aircraft systems and munitions — all hidden under raw sugar and in violation of UN sanctions against North Korea..
“At that time when the NK weapons were loaded, they were loaded at the port of Mariel, which was not open to the public, it was still under construction so only two people [had] access to it: Almacenes Universales [another GAESA company] and Odebrecht,” said a senior Trump administration official, who demanded anonymity because he wasn’t authorized to comment on the sensitive matter.
What did Hueb and Odebrecht know? Odebrecht did not respond, and Hueb said in a follow-up text message that he “did not have any sort of knowledge” of the matter. The incident would have been roughly half a year into Hueb’s time as head of Cuba operations, according to his profile on LinkedIn. He threatened to sue for any “false publication related to my name.”
The Drousys documents about Cuba include reference to a revised petition in 2011 to the Treasury Department’s Office of Foreign Assets Control, which oversees sanctions, concerning a nickel plant at an unidentified locale. There are also references to a petition to unfreeze unspecified blocked assets in 2013, the same year as the Chong Chon Gang seizure.
Multiple former OFAC officials declined to discuss the petitions, as did lawyers for White & Case, a U.S. law firm that handled a wide array of Odebrecht matters.
Miami Nice
When word of Odebrecht’s involvement in Mariel spread several years into the project, reaction in Miami was fierce. It fell to Gilberto Neves, then the head of Odebrecht Construction Inc., the parent firm’s Miami subsidiary, to fend off criticism. His company was boycotted by the influential Latin Builders Association.
Now running his own construction company in Miami, Neves insists he was never asked to testify in U.S. or Brazilian investigations. On Cuba, he said he was sympathetic to Miami exiles.
“I told everyone who would listen that building in Cuba was a mistake, but I had no influence or input on projects outside the United States,” he said in a statement.
Odebrecht’s internal emails make it clear executives hoped to grow business in Cuba while still keeping it in Miami.
“I don’t even have to say that the visit to the island must be done under maximum discretion, under the risk of enormous loss for Gilberto,” Marcelo Odebrecht cautioned in a Nov. 21, 2007, email to three company executives.
marcelo-email.jpg
This scren
Miami didn’t bring in much revenue, but it allowed company officials to brag to global investors and banks how they’d built the control tower at Miami International Airport and the city’s splashy basketball arena.
Less than two months later, and ahead of a trip to Cuba by executive Ricardo Boleira Sieiro Guimaraes, Marcelo warned in a Jan. 11, 2008, email: “Remember: Your presence on the island Ricardo must be VISIBLE to the Brazilian government and INVISIBLE to the media.”
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A changing political landscape clearly influenced Odebrecht’s jump into Cuba, even if it meant eventually losing much of its vaunted Miami business.
Brazil’s left-leaning Workers Party came to power in 2002, and President Lula — a former union leader jailed for opposing Brazil’s nearly 21-year-long dictatorship — sought to support Cuba and leftist governments across the region. Odebrecht was a means to that end.
“The Lula government and its successor, Ms. Rousseff, they absolutely looked at Odebrecht as almost a sovereign wealth fund,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a New York-based clearinghouse for information on the Cuban economy.
A decade ago, cozying up made sense. Brazil’s then-ruling party, known by its initials PT, looked like it would have a long run in power.
“Odebrecht along with other companies went to work on the PT very early. But as we’ve learned … the PT was building a new 21st century model of corruption,” said Thomas A. Shannon Jr., U.S. ambassador to Brazil from 2010 to 2013 and acting secretary of state for the first few months of 2017.
Another factor was President George W. Bush’s punitive approach to Cuba, rejecting the Canadian and Spanish opening to the Castro brothers.
“Brazil came to the conclusion that the only potential investors in Cuba were going to be Chinese and Venezuelan, and it did not want to be left out of that opportunity,” said Shannon. “And that’s where Mariel became a strategic imperative for the PT, and where Odebrecht became a useful tool for them.”
But that did little to quell backlash in Miami. Both city and state politicians sought to restrict Odebrecht from Florida projects, passing in May 2012 a state ban on contracts with subsidiaries of companies like Odebrecht that did business with Cuba. Odebrecht sued and the action was struck down by the courts.
The U.S. subsidiary in a July statement cited a confidentiality agreement its parent company reached with the U.S. Justice Department in declining to answer specific questions for this story.
“As an international exporter of engineering services, the Odebrecht group established an independent, special-purpose subsidiary to develop infrastructure projects in Cuba in a manner not to violate U.S. laws and applicable regulations,” the statement said. “Odebrecht USA’s operations have not provided any financial, technical, or human-resource support to the subsidiary in Cuba. Furthermore, none of Odebrecht USA’s employees have any involvement in projects in Cuba.”
That answer doesn’t sit well with the Trump administration.
“Any lawyer understands that a wholly owned subsidiary is part of that company, so you’re responsible for the behavior of the parent company,” said the senior Trump administration official.
Asked if Odebrecht may have been in violation of longstanding U.S. trade prohibitions with Cuba, the official said that “there is nothing to say that they didn’t do that.”
Monika Leal in Miami and Ben Wieder in Washington contributed, as did Guilherme Amado and Thiago Herdy of Revista Epoca in Brazil. Also contributing were Venezuela’s investigative website Armando Info and the Peruvian investigative website IDL-Reporteros. Both shared documents as part of the the Latin American Investigative Journalism Network, comprising journalists in Brazil, Argentina, Venezuela, Colombia, Ecuador, Panama, Uruguay and Mexico.
Kevin Hall: 202-383-6038, @KevinGHall. Nora Gamez-Torres: 305-376-2169, @ngameztorres
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