Infamous ‘Construction Club’ linked to Amazon Waterway bid

Executives from Sinohydro's partner company are suspected of involvement in contractor cartel
<p>The waterway is highly controversial among environmentalists and indigenous communities, who say it will affect their livelihoods. Photo:</p>

The waterway is highly controversial among environmentalists and indigenous communities, who say it will affect their livelihoods. Photo:

At least two executives from the company CASA who are under investigation for their links to construction companies that paid bribes in exchange for infrastructure contracts in Peru, were directly involved in bidding for the Peruvian Amazon Waterway megaproject, an investigation by Convoca has revealed. The waterway, known as the Hidrovía Amazónica in Spanish, is highly controversial among environmentalists and indigenous communities, who say it will affect their livelihoods.

Representatives of Construction and Administration SA (CASA), a Peruvian subsidiary of the Ecuadorian Hidalgo and Hidalgo, which partnered with China’s Sinohydro to form the bid-winning Cohidro consortium, had privileged access to Peru’s Ministry of Transport at key moments in the bidding process.

The winning project

President Martín Vizcarra, who was vice president at the time of the bid, won plaudits when the winner of the million-dollar award of the Peruvian Amazon’s first waterway project was announced on July 6 2017. The winning Hidrovías II consortium would later change its name to Cohidro.
That day, state agency Proinversión reported that Hidrovías II won with “the best economic proposal”, bidding with US$89 million, $10 million less than competitors and amid a “rigorous qualification process”.

What wasn’t said during the official ceremony is that representatives of CASA were linked to the ‘Construction Club’ corruption case, which alleged an illegal agreement between Peruvian construction companies to share public works contracts awarded by the Ministry of Transportation. The investigation is connected to the Brazilian Operation Carwash (Lava Jato) which implicated Odebrecht, Andrade Gutierrez, OAS and Queiroz Galvão.

Between 2016 and 2017, representatives of the CASA and Sinohydro consortium visited employees at the Ministry of Transport dozens of times, according to an official visitors register. Many of these occurred before the Hidrovía was open to open offers and before authorities had revised the technical requirements to choose a winner. There were also various visits to Proinversión at strategic moments in the process.

None of the other companies competing for the project – the Belgian Jan de Nul and China Communications Corporation Company (CCCC) visited the ministry over the same timeframe.
Among the key people who participated in these meetings is Jaime Sánchez Bernal, an Ecuadorian national and CASA’s general manager, who is currently under investigation as part of the ‘Construction Club’ case for influence peddling, illicit association and money laundering.

Sánchez Bernal was accused of delivering US$100,000 to former President Pedro Pablo Kuczynski’s 2016 election campaign and, since March 2018, has been unable to leave Peru under federal anti-corruption prosecutors’ orders. However, he continues to work as CASA’s general manager.

Luis Carrasco Palomo, director of CASA, also appears in the Ministry of Transport’s visitor log that coincides with the Hidrovía bidding process. Carrasco signed two of three contracts identified by the Prosecutor’s Office as being suspected of alleged bribe payments on behalf of the company. These projects are the Tingo María-Aguaytía road, in the Amazonian city of Pucallpa, the Juanjuí-Tocache road and the Campanilla road in San Martín, and the Chamaya-Jaén-Puente Integración road near the northern city of Cajamarca.

The General Attorney’s Office was already conducting a preliminary investigation of the Construction Club case when Cohidro’s winning Hidrovía bid was announced, according to whistleblowers at the corrupt Brazilian multinational Odebrecht and other collaborators. The press announced the existence of the Club a day later. Yet meetings between CASA representatives and officials continued.

Allegations of Cohidro members’ corruption are not limited to Peru. Hidalgo & Hidalgo, the parent company of CASA in Ecuador, faces corruption investigations at home for bribes revealed by its partner Odebrecht in Phase 2 of the Carrizal-Chone irrigation project in the north of the country.

In Panama, Hidalgo & Hidalgo was involved in a corruption scandal that ended with the imprisonment of former Vice President Felipe Virzi. The company was accused of paying more than US$10 million in bribes to Virzi after benefiting from an irrigation project in the Tonosí Valley, which was worth $155 million.

In the so-called Arroz Verde (Green Rice) case, in which payments to former president Rafael Correa’s political party Alianza País during the 2014 elections, Cai Runguo who is connected linked to Sinohydro, also appears involved.

Given this background and serious questions about the environmental and social impact of the Amazonian Waterway, Convoca built a database of key visits throughout the bidding process, and reviewed the technical file of the project and other documents that highlight the connections and privileges of people influential in the winning bid who are linked to corruption investigations.

The visits

Cohidro representatives visited the offices of senior officials of the Ministry of Transport between August and September 2016, and on the evening of September 21, the date on which the third draft concession contract was published. This is the preliminary step for a final version of the document.

On August 17 2016, Cohidro’s Carmen Benítez Hernández and CASA executives Jaime Sánchez Bernal and Luis Carrasco Palomo, who are under investigation as part of the Construction Club case, met with Fiorella Molinelli, a former transport administrator, who was later charged with aggravated collusion in another case.

hidrovia visitas

The visitors’ registry also shows another protagonist in the consortium: Eusebio Vega Bueza, currently Cohidro’s technical manager. Most of his meetings are with the officials of the water transport division in the Ministry of Transportation, which was under his helm until 2001. He ended up resigning after granting the concession of Puerto Matarani to Santa Sofías Puerto, the only bidder despite the fact that there we originally nine interested and pre-qualified companies in competition.

After leaving the Ministry, Vega went to the National Port Authority and then continued working as a consultant until he joined Cohidro in 2017. In conversation with Convoca, Vega explained that during the bidding process on the Amazon Waterway he provided independent advice on technical aspects for various companies.

When asked about the September 13 2016 visit, Vega acknowledged that he attended a meeting with Sinohydro’s Gao Qiguang, because “he was helping them update their technical proposals” for the megaproject. He also said he was hired by another company called Kapac SAC to provide his services as an external advisor.

Vega Bueza
Eusebio Vega Bueza acknowledged that he attended the meeting with representatives of Sinohydro such as Gao Qiguang, representative of the Chinese company that is a partner of Cohidro. Photo: Ministry of Transport

On that occasion, Vega’s meeting between Vega and Chinese businessmen also included Juan Carlos Paz Cárdenas, then director of the General Directorate of Aquatic Transport, where Vega had been the managing director years previously.

Vega stressed that, during the bidding process, the megaproject did not have any direct contractual link with CASA or Sinohydro. He also questioned the transport ministry’s visitor registration system and claimed they are inaccurate because he is listed as appearing at meetings representing Cohidro in September 2016, when the company did not legally exist.

However, the consortium was already operating under its previous name Consortium Hidrovías II, which was one of the bidders.

The lawyers

A month before the March 8 2017 modification of the final concession agreement, there are records of meetings at the transport ministry led by Hugo Morote Núñez, the main partner of Roselló Abogados, a law firm that advised thee Hidrovías II Consortium on the bidding process.

One of the meetings was held on February 9, when Morote met with Diego Fernando Mori Franco, a legal analyst at the ministry’s General Directorate of Transport Concessions. A few months later, Franco joined Rosselló to advise one of the firm’s clients, as his Linkedin account shows.

Mori told Convoca that he did meet with Morote, who had previously been his boss at Rosselló Abogados. However, he said that the meeting did not discuss the Amazon Waterway. “The meeting was about the longitudinal road of the sierra. I dealt with land issues at that time,” he said.

Mori admitted that when he resigned from the Ministry because of ‘personal issues’, he immediately joined Roselló Abogados, who instructed him to advise Concessionaire Puerto Amazonas SA (Copam), where he worked with Carmen Benítez Hernández, Copam’s general manager and now also general manager of Cohidro. Copam is part of Ecuador’s Hidalgo and Hidalgo, which CASA and Cohidro also belong to.

Lawyer Hugo Morote Núñez visited the Ministry of Transport’s Concessions Director, Yaco Paul Rosas Romero, four times between March and April 2017. All of these were days prior to the April 27 approval by state investment promotion agency Proinversión of the waterway concession. On one of these visits (March 22) lawyer Morote accompanied Carmen Benítez Hernández, today general manager of the consortium in charge of the Waterway.

Convoca asked for Morote’s account, but the lawyer Miguel Sánchez Moreno, senior associate of the same firm, who advised Cohidro from the beginning of the megaproject award process, responded on his behalf.

Cohidro's headquarters in the district of Santiago de Surco in Lima Photo:

Sánchez Moreno, who was Proinversión’s legal affairs manager until June 2006, argued that the frequent visits made by him and Morote to the Ministry were to address issues about various clients. In addition, he said that the information in the Ministry’s visitor records had errors and “the chaos in the system is generating confusion.”

A day before the July 5, 2017 announcement that the Hidrovías II Consortium (Cohidro) had won the tender, lawyer Hugo Morote met with Rosa Nakagawa Morales, who replaced Yaco Roses in the General Directorate of Concessions in Transportation.

Cohidro’s response

Convoca requested an interview with Cohidro representatives about the meetings at the transport ministry and Proinversión during the process of awarding the Amazon Waterway contract.
Initially, they refused to comment, then they invited us to their headquarters for an interview, on December 4, as this story was being finalised.

But when we asked the managers questions, they opted for silence. “We cannot talk about previous meetings because we have no knowledge of them,” said Narcory Carretero, Cohidro’s social responsibility manager, who was accompanied by Saúl Cárdenas, head of administration and finance. We were then referred to Miguel Sánchez Moreno from the Roselló Abogados, who said over telephone that he did not remember so many visits.

On December 4, as we were closing this report, we received an email from Saúl Cárdenas in which he pointed out that there are errors in the ministry’s registration system. He argued that Vega had just started working for Cohidro on September 19 2017. He also claimed it was not possible for the general manager of Roselló Lawyers, Miguel Morote, to visit the ministry on behalf of Cohidro because it was only established as a company in August 2017.

However, the consortium had existed since the end of 2015, when the bidding process for the Amazon Waterway began. There is a record of this in an agreement between CASA and Sinohydro, as Sánchez Moreno of Roselló Lawyers explained to Convoca over the phone.

Until publication, the press area of the Ministry of Transportation had not answered questions regarding visits by Cohidro representatives. Meanwhile, the ministry’s citizen orientation coordinator, Rocío Padilla, explained that each employee, and management, have the responsibility to record their visits, so there is no possibility of altering that information.

Proinversión’s visits

Representatives of Cohidro also attended meetings at Proinversión, the body in charge of the Waterway, before and after the bidding process.

In these meetings, one name stands out: Tharcizio Calderaro Pinto Junior, former director for Latin America at the Brazilian construction company Camargo Correa, which is under investigation as part of Lava Jato.

Representing Sinohydro, Pinto Junior met with Luis Natal del Carpio Castro, project manager on issues related to the Amazon Waterway at the transport ministry, on July 14 2017. This meeting was held eight days after the final decision on the megaproject. In total, Pinto Junior had up to four meetings with Del Carpio.

Del Carpio Pinto
Pinto Junior met on July 14, 2017 with Luis Natal del Carpio Castro, Project Manager for the Amazon Waterway. Photo: Ministry of Transport.

Proinversión told Convoca: “there is no restriction on holding meetings deemed necessary, subject to the progress of the private investment promotion process.”

For their part, competing company Jan de Nul’s management said they followed “the formal channels to present the technical and economic proposals” and if there was any doubt in the bidding process, the consultations were made in writing. They did not visit the transport ministry, as Cohidro did.

This story was published by as part of its investigative work on the ‘Construction Club’. The work is republished here with permission.