Breaking: Brazil suspends business projects in Mozambique, Angola over ‘Operation Car Wash’

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Breaking: Brazil suspends business projects in Mozambique, Angola over ‘Operation Car Wash’

10:19 CAT | 12 Oct 2016

Observador (File photo)

The National Bank for Economic and Social Development (BNDES) of Brazil announced on Tuesday that funding for 25 projects by companies investigated by its own “Operation Car Wash” (“Lava Jato”), including some in Angola and Mozambique, have been suspended since May.

The 25 projects are worth in total US$7,036 billion (EUR6,361 billion euros), of which US$2.3 billion (EUR2,079 billion) has already been paid out, according to a BNDES statement.

At stake in Angola are projects at the Capanda Polo Agroindustrial, the Lauca (AH Lauca) hydroelectric project, the embankment of Cambambe and the second central Cambambe dam, a total investment of US$808.8 million (EUR731 million). In Mozambique, funding for the US$320 million (EUR289.3 million) Moamba Major dam has been put on hold.

Finance was also cancelled for two projects in Argentina, one in Cuba, one in Ghana, one in Guatemala, one in Honduras, seven in the Dominican Republic and seven in Venezuela. BNDES’s website declares it to be one of the world’s largest development banks.

The statement says the suspension covers “financing contracted to the export of engineering services of Odebrecht, OAS, Queiroz Galvão, Camargo Corrêa and Andrade Gutierrez”. The five contractors are being investigated in connection with corruption at the Petrobras state oil company.

Mhoje_moambamajor_photo_jpg — BNI / Artist’s impression of the future Moamba Major dam, in the Incomati River

The development bank announced a “reassessment of the current loan portfolio, consisting of 47 projects in various stages of completion (contracted, approved, under analysis and consultation)”, including the 25 suspended.

BNDES financing to foreign infrastructure projects has been embroiled in controversy involving suspicions of overpricing and favouritism.

The evaluation of projects will take into account the stage of progress, the level of other lenders’ funds and the impact of new financing on exposure and risk to BNDES in each country, according to the BNDES.

The bank pointed out that “there is no record of default of BNDES loans”, and new procedures for financing the export of engineering and construction services were announced.

“The new criteria were defined taking into account consultations between the BNDES and the Attorney General’s Office (AGU) and other organs of the government’s support system for exports as well as the recommendations made by the Court of Auditors (TCU),” the bank said.

Source: Lusa