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Latin American Economy & Business - March 2017 (ISSN 1741-7430)

Region: Corporate Radar

Graña y Montero troubles: The Peruvian construction group Graña y Montero has been hit by the knock-on effects of corruption allegations involving Odebrecht, the Brazilian construction group it has partnered with on various large projects, including the US$7.3bn Gasoducto del Sur pipeline. One of the allegations is that former Peruvian President Alejandro Toledo (2001-2006) was paid a US$20m bribe to ensure that an Odebrecht-led consortium won the tender to build a segment of the Brazil-Peru Inter Oceanic highway. Jorge Barata, Odebrecht’s former Brazil represtentative and now turned state’s witness in Brazil as part of the major corruption investigations there, has claimed that the other companies in the consortium including Graña y Montero, were aware of the payment. Graña y Montero shares, which are listed in both Lima and New York, fell by 33.3% and 34.7% respectively on the news. The company rapidly denied the allegations that it had knowledge of any bribery payments, but this did not head off the announcement of a class action on behalf of shareholders led by Rosen Law of the US, alleging that the company’s shareholders had been given materially inaccurate information.

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