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Peru Would Retain Money from Odebrecht Deal

Source: Reuters 1/9/2017, Location: South America

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Peru would withhold any money Brazil's Odebrecht SA might make by selling its 55 percent stake in a natural gas pipeline project while prosecutors probe bribes the company has admitted to distributing in the Andean country, the government said.

Odebrecht, a family-owned engineering conglomerate at the center of a massive graft scandal in Latin America, might be able to collect the earnings once it clears up its corrupt acts, Finance Minister Alfredo Thorne said.

"If Odebrecht does sell its stake, it wouldn't collect," Thorne said in an interview with local TV station Canal N. "That money would turn into a guarantee in the event there was any corruption."

Odebrecht declined to comment.

Odebrecht must exit the $5 billion pipeline project - a condition of banks that would provide a $4.1 billion loan for construction - before Jan. 24 when a financing deadline must be met, Thorne said.

But Odebrecht's acknowledgement last month in a U.S. plea deal that it had distributed $29 million in bribes to secure public work projects in Peru has clouded its prospects of closing a deal.

Last week Odebrecht agreed to give local prosecutors details on its bribes in Peru, depositing an initial $8.9 million in public coffers as a gesture of goodwill.

The company, which has had an outsized presence in construction projects in Peru in the past decade, has turned into a symbol of high-level corruption for many Peruvians - fueling calls for its assets to be seized and its contracts revised.

Thorne said the government was also preparing a law to unlink financing of the pipeline from consumer electricity bills.

Odebrecht and its junior partner Enagas SA won the pipeline contract in 2014 during the previous government after their sole competitor was disqualified the day of the auction.

Enagas now controls a 25 percent stake in the project. Peruvian construction group Grana y Montero , whose shares dropped by more than 5 percent on Monday, bought a 20 percent stake in the project from Odebrecht in 2015.

Odebrecht has said it invested at least $1 billion in the pipeline, which was about a third finished when work on it ground to a halt last year.

A day before the U.S. plea deal was made public, Odebrecht had been finalizing a deal to sell its stake to Brookfield Asset Management Inc, according to Thorne.

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