chapter  3
14 Pages

Competing to be corrupt

The multinational dynamics of public procurement bribery in Latin America
WithConnor Wahrman

This chapter investigates whether Odebrecht, the Brazilian industrial conglomerate implicated in Lava Jato, selected countries in which to do business based on countries’ perceived corruptibility. From 2001 through 2016, Odebrecht paid 788 million United States dollars (USD) in bribes and received 3.336 billion USD in profits in ten Latin American countries: Argentina, Brazil, Colombia, the Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Peru, and Venezuela. Odebrecht revealed these details as part of a plea deal with the United States Department of Justice in late 2016 in order to reduce its penalties for Foreign Corrupt Practices Act (FCPA) violations. Using this information, as well as public procurement corruption data from the 2004–2005 Global Competitiveness Report, econometric analyses suggest that Odebrecht avoided Latin American markets in which its bribery strategy was less likely to be successful. This revealed preference challenges the claim that Odebrecht was a neutral actor in a corrupt environment, and, instead, provides evidence that the company may have exploited regional variation in public procurement corruption as part of its business practices.