….was linked to massive corruption scandals in Brazil
(Kaieteur News) – A U.S.-linked company with a controversial corporate history in Brazil is among the international firms seeking to secure a major energy contract in Guyana, raising questions about the Government’s evaluation of bids for the long-awaited Amaila Falls hydropower project.
The company, OEC USA, has submitted a joint proposal with U.S. energy giant GE Vernova and Australian engineering firm Worley for the project, which is expected to generate at least 165 megawatts (MW) of electricity.
The Government is currently reviewing five proposals from international firms for the project.
Sources familiar with the process told Kaieteur News that the consortium has submitted the highest bid but is receiving significant support from the United States, with cheaper proposals from Chinese and Indian companies also under consideration.
U.S. Ambassador Nicole D. Theriot with President Irfaan Ali.
The United States Export-Import Bank (EXIM) has offered financing support for the project, potentially giving U.S. companies a significant advantage in the procurement process.
The development has prompted renewed scrutiny of OEC USA because of its corporate links to the former Brazilian conglomerate Odebrecht, which was at the centre of one of the largest international corruption investigations in recent history.
Odebrecht’s controversial history
Odebrecht was a major Brazilian construction and engineering conglomerate that became deeply implicated in Brazil’s Operation Car Wash (Lava Jato) investigation.
The investigation uncovered a sophisticated system through which payments were allegedly made to secure contracts in several countries.
In 2006, Odebrecht established what became known as the Division of Structured Operations (DSO), an internal structure that prosecutors said was used to manage illicit payments.
The company also operated an encrypted communications platform known as Drousys, which investigators said was used by employees and intermediaries involved in the payment system.
According to U.S. authorities, between 2001 and 2016, Odebrecht paid approximately US$788 million in bribes and generated more than US$3 billion in illicit profits.
In 2016, Odebrecht and its petrochemical affiliate Braskem reached a settlement with authorities in the United States, Brazil and Switzerland involving approximately US$3.6 billion in penalties.
The U.S. Department of Justice said the companies had made improper payments in several countries in order to obtain public works and infrastructure contracts.
OEC and the corporate restructuring
Odebrecht subsequently underwent significant corporate restructuring and rebranding, with the company now operating under the OEC name in several markets.
The company has also faced substantial financial challenges.
Fitch Ratings downgraded OEC to a ‘CC’ rating in 2024, citing a high probability of default. The rating agency highlighted negative consolidated shareholders’ equity of approximately BRL16.6 billion.
The company has also been undergoing a major financial restructuring in Brazil.
OEC’s financial circumstances have attracted further attention following proceedings in the United States involving its North American assets.
At the same time, the company’s independent monitorship under the U.S. Department of Justice, imposed following its earlier enforcement case, ended in May 2020, allowing the company to resume operations without that specific monitoring arrangement.
OEC’s growing presence in Guyana
OEC is now seeking to expand its involvement in Guyana.
Beyond its bid for the Amaila Falls project, the U.S. Embassy in Georgetown recently highlighted Citibank’s announcement that it would provide financing for OEC USA Inc.’s bid to construct the new Lethem Airport in Region Nine.
The U.S. Ambassador described the financing arrangement as an important development for Guyana’s integration into global financial markets.
OEC’s participation in the Amaila Falls procurement therefore places the company at the centre of another major Guyanese infrastructure initiative.
The circumstances have prompted questions about how the Government will balance financing arrangements, bid costs, technical capacity, financial strength and the historical record of companies competing for major public contracts.
Lessons from the Lindsayca experience
The concerns come as Guyana continues to grapple with delays surrounding the Wales Gas-to-Energy project, where Lindsayca received a US$759 million contract with U.S. support.
As previously reported by Kaieteur News, Lindsayca faced serious financial challenges when it secured the contract and has subsequently encountered difficulties completing the project.
The Wales project has experienced significant delays and cost increases, with the overall cost reportedly moving beyond the initial billion-dollar range.
Guyana has also faced an arbitration dispute linked to delays on the project, reportedly resulting in an award of nearly US$100 million.
The experience has intensified scrutiny of the Government’s approach to selecting international contractors for major infrastructure projects.
With Guyana preparing to make a decision on the Amaila Falls project, the Government will have to consider not only the financing available to it, but also the financial standing, technical capacity, corporate history and track record of each bidder.
Source: Kaieteur News
