CEOs from Odebrecht and Andrade Gutierrez detained in Brazil’s Petrobras scandal

The heads of two of Brazil’s largest conglomerates were detained by police as part of a widening corruption investigation at state oil company Petrobras.

Marcelo Odebrecht and Otavio Azevedo, presidents of the Odebrecht and Andrade Gutierrez holding companies, were detained by police, according to spokespersons for the companies. The arrests were part of a federal operation that involved 220 police in four states carrying out judges’ orders for detention and arrest of 12 people, as well as 38 search and seizure orders.

The Odebrecht and Andrade Gutierrez conglomerates include two of Latin America’s largest building companies. Petrobras has said it was hoodwinked by a few of its employees who allegedly took bribes from a cartel of construction companies and shared the proceeds with politicians. Petrobras has written down 6.2 billion reais ($2 billion) in graft losses, and said that figure may rise.

“We have no doubt that Odebrecht and Andrade were leading the scheme,” prosecutor Carlos Lima said in a televised press conference from Curitiba, where the case is before a judge.

Brazil’s Federal Police are investigating money laundering, embezzlement and racketeering as part of the probe.

Odebrecht’s construction unit said in an e-mailed statement that its offices in Sao Paulo and Rio de Janeiro had been searched and that arrest warrants had been carried out. The company said the detentions were unnecessary since the company and its executives have cooperated with the investigation.

Odebrecht, an industrial conglomerate with 108 billion reais in revenue last year, owns Latin America’s biggest construction company and shares control with Petrobras of the region’s largest petrochemicals maker. It is controlled by the billionaire Odebrecht family, headed by CEO Marcelo, who is the grandson of late founder Norberto Odebrecht.

A subsidiary of Odebrecht, Coral Gables-based Odebrecht USA, has worked on a steady stream of public projects all over South Florida since its first local project, the Metromover, in 1991. Marcelo Odebrecht himself worked briefly in the firm’s Miami office in 1991 when he was a 21-year-old intern and returned in 1994 to serve as a project manager before he rejoined the company in Brazil.

Since 1991, Odebrecht USA has worked on billions of dollars worth of projects, including American Airlines Arena, the Adrienne Arsht Center for the Performing Arts, the North and South Terminals at Miami International Airport, the Florida International University football stadium, reinforcement of wharves at PortMiami, the Miami Car Rental Center, the Golden Glades flyover and a new runway at Fort Lauderdale-Hollywood International Airport.

Another Odebrecht affiliate, Companhia de Obras em Infraestrutura, worked on the project to revamp the Cuban port of Mariel, causing a backlash against Odebrecht USA. The Florida Legislature passed a law in 2012 that prohibited state and local governments from hiring companies with business ties to Cuba for any project worth at least $1 million.

Although it didn’t mention Odebrecht USA by name, it appeared to target the company. Odebrecht USA successfully sued in federal court and the state agreed not to enforce the law.

Andrade Gutierrez in an e-mailed statement said it was aiding in the police investigation and denied any involvement in relation to the so-called Carwash operation, referring to investigations into a scheme of alleged kickbacks on service contracts at state-run oil company Petrobras. The corruption investigation was dubbed Carwash because of money laundering operations run out of a gas station

The billionaire Andrade and Gutierrez families share control of the Andrade Gutierrez conglomerate. It has interests in construction, energy, telecommunications, logistics, real estate and infrastructure.

It is the most senior-level detainment of corporate executives since the Petrobras scandal broke last year.

The executives will be taken to Curitiba, capital of the state of Parana, Federal Police officials said at a televised press conference Thursday, where they confirmed both executives had been detained.

Miami Herald Staff Writer Mimi Whitefield contributed to this report.

This story was originally published June 19, 2015 at 2:27 PM with the headline "CEOs from Odebrecht and Andrade Gutierrez detained in Brazil’s Petrobras scandal."