Brazil corruption probe threatens Rio Olympics preparations

Fri Jul 31, 2015 9:12am EDT
 
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By Stephen Eisenhammer

RIO DE JANEIRO (Reuters) - Brazil's largest-ever corruption scandal threatens to slow down preparations for the Olympic Games in Rio de Janeiro next year as it engulfs construction companies responsible for the lion's share of projects worth around $12 billion.

    Prosecutors investigating the scandal at state-run oil firm Petrobras have implicated more than 20 companies, including five that are working on Olympics venues and infrastructure.

    The investigation, dubbed "Operation Car Wash", has pushed the companies into a tight spot as their credit lines dry up and top executives are in jail awaiting trial.

Scrambling to limit the fallout, Rio's city government is at times being forced to act like a bank, lending companies money to prevent a slowdown in construction, a senior city government source told Reuters.

    "We are giving companies the money in advance and when the funds are freed up at the federal level they are passed to City Hall," the source said. 

    Of the five firms, Odebrecht [ODBES.UL] is involved in over half of all Olympics projects by value. The other four account for much of the rest: OAS SA [OAS.UL], Andrade Gutierrez SA, Queiroz Galvao SA, and Carioca Christiani Nielsen Engenharia SA.

    OAS, one of Brazil's biggest construction firms, filed for bankruptcy protection in March after its credit lines dried up.

    It is part of the consortium building a group of Olympics venues at Deodoro in northeast Rio, where 11 sports including rugby, shooting and BMX riding will be held.   Continued...

 
Workers are pictured at the construction site of the Carioca Arena venue at the Rio 2016 Olympic Park in Rio de Janeiro, Brazil, July 24, 2015.  REUTERS/Sergio Moraes -