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Colombian AVAL Banking Group Strikes $80 Million Settlement Over Highway Bribery Scheme – WSJ

  • Prosecutors say Grupo Aval and banking subsidiary participated in a scheme to bribe officials for a contract to build a highway toll road in Colombia’s northeast
Grupo Aval trades on the New York Stock Exchange.
Grupo Aval trades on the New York Stock Exchange. (courtney crow handout)

Dylan Tokar, WSJ

Energiesnet.com 08 14 2023

Colombian financial holding company Grupo Aval and its banking subsidiary have agreed to pay more than $80 million in fines to resolve investigations into a scheme to bribe Colombian government officials to win a highway construction contract.

At federal court in Baltimore, representatives for Grupo Aval and its subsidiary Corporación Financiera Colombiana, also known as Corficolombiana, entered into an agreement with U.S. prosecutors on Thursday to settle violations of the U.S. Foreign Corrupt Practices Act. The two firms also settled related civil claims in an administrative proceeding with the U.S. Securities and Exchange Commission.

In a statement to investors on Thursday, Grupo Aval said it took responsibility for its actions.

“Corficolombiana and Grupo Aval consider this painful chapter closed, insisting on their commitment to the highest ethical standards and the continuous strengthening of their control environment,” the group said.

One of Colombia’s largest commercial banking groups, the company is controlled by Luis Sarmiento, one of the South American country’s wealthiest men.

Thursday’s announcement is the latest development in the widespread corruption investigations tied to the operations of Brazilian construction company Odebrecht, which in 2016 admitted to bribing officials in several Latin American countries to secure lucrative infrastructure contracts. 

The charges leveled against Grupo Aval center on a highway infrastructure project known as the Ruta del Sol 2 that Odebrecht allegedly spent at least $30 million in bribes to win a stake in, according to Colombia’s attorney general. Together, the two companies sought to win a contract to develop a 328-mile stretch of the project, a tolled extension road located in the Colombian state of North Santander.

Between 2012 and 2015, Corficolombiana conspired with Odebrecht to pay more than $23 million in bribes to officials in Colombia’s legislative and executive branches, as well as to an executive at its state-owned infrastructure agency, to win the contract to construct and operate the extension, according to U.S. prosecutors. 

A portion of the bribe payments were paid with the knowledge and approval of Corficolombiana’s former president, according to the SEC, who was sentenced to nearly 12 years in prison in Colombia after a trial in 2019.

A former Colombian deputy transportation minister also pleaded guilty in Colombia to his role in arranging bribe payments and was sentenced to five years in prison in 2017. He was released in 2020 after collaborating with investigators.

As part of its deal with the Justice Department, Corficolombiana on Thursday entered into a deferred prosecution agreement, under which prosecutors agree to dismiss their charges against the bank if it succeeds in strengthening its anticorruption compliance program. 

The agreement resolves violations of the FCPA, which prohibits companies from paying bribes to foreign government officials to gain a business advantage. 

U.S. prosecutors said they had agreed to credit up to half of a $40 million criminal penalty imposed on Corficolombiana against fines the bank and one of its subsidiaries paid to authorities in Colombia. The Justice Department said the coordinated settlement was the first such case resolved in tandem with Colombian authorities.

Under the agreements, Corficolombiana and Grupo Aval, which trades on the New York Stock Exchange, will pay another $40 million in disgorgement to the SEC.

In 2020, Colombia’s industry and commerce regulator fined Odebrecht, as well its Colombian partners in the road project, Corficolombiana, and its subsidiary, Episol, a total of $84 million for business practices that undermined competition.

Sarmiento has denied any role in the Odebrecht bribery. The scandal led authorities to cancel the roads project until it was revived last year under a different name. Colombian prosecutors in 2021 dropped an investigation into Sarmiento, saying they didn’t find evidence of his involvement in the scandal.  

—Kejal Vyas contributed to this article.

Write to Dylan Tokar at dylan.tokar@wsj.com

wsj.com 08 10 2023

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