Grana y Montero in stock crisis, says Odebrecht partnership a 'mistake'
Petroleumworld.com 01 13 2017
Peruvian builder Grana y Montero's shares dropped by more than 12 percent on Thursday after it called its partnership with corruption-plagued Brazilian builder Odebrecht a "mistake" and said it was considering taking legal action.
Corporate General Manager Mario Alvarado said in an interview with local Peruvian magazine Caretas that Grana knew nothing about any kickback schemes and had no idea that Odebrecht had a special department dedicated to secretly distributing bribes.
"It's clear we made a mistake in this partnership," Alvarado was quoted saying in the magazine's edition published Thursday. "We're studying our legal options in order to make a decision."
Grana confirmed the accuracy of the quotes.
The company's shares closed 14.6 percent lower on Lima's bourse on Thursday and 12.15 percent weaker in New York.
Grana's shares have dropped about 42 percent on both stock exchanges since December 21, 2016 when Odebrecht acknowledged in a U.S. plea deal that it distributed $29 million in bribes to win public work contracts in Peru from about 2005 to 2014, part of hundreds of millions in corrupt payments across the region.
Grana has been one of Odebrecht's most important Peruvian partners this century, working with it on half a dozen public work contracts worth more than $10 billion, according to a report by the comptroller's office on Wednesday.
Grana owns a 20 percent stake in a natural gas pipeline project that Odebrecht won in 2014 after its sole competitor was disqualified the day of the auction. Grana was not a part of the original consortium and bought its stake from Odebrecht in 2015.
The government has said it would cancel the pipeline contract if financing that hinges on Odebrecht exiting the project does not come through this month. Odebrecht has been trying to sell its 55 percent stake for more than six months and has been in talks with Brookfield Asset Management Inc .
Odebrecht has said it would cooperate with local prosecutors to reach a plea deal that would include civil reparations for crimes committed.
Story reporting by Ursula Scollo and Mitra Taj; Editing by Diane Craft from Reuters.
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