A criminal group in Peru built a phony government office to swindle contractors bidding on a public works project, although the scheme only worked because such projects have long been vehicles for bribery and corruption.
By opening offices, acting as employees, and creating counterfeit emails and documents, the criminal group passed itself off as a Peruvian government agency responsible for a massive infrastructure project in the northwestern department of Piura, according to a news release by authorities.
News reports differ on how much money was bilked, but anywhere from 50 to 100 contractors were taken in by the scheme. The contractors came into contact with the group after responding to ads in a Peruvian publication about bidding on contracts connected to the infrastructure project known as “Reconstrucción con Cambios” (Reconstruction with Changes). The project provides some 25 million soles ($7.5 million) to regions in Peru that saw damage from rains and landslides caused by the weather phenomenon, El Niño, in 2017.
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Using three offices rented in Piura’s Chamber of Commerce building, the criminal group duped the contractors into believing they were part of the government agency behind the infrastructure project.
In meetings, they offered to help the contractors fast track the documents needed to satisfy bidding requirements, such as obtaining technical licenses and finance letters. For such services, the contractors paid anywhere from 2,500 ($750) to 15,000 soles ($4,500).
The fake government employees then informed contractors the winning bids would be decided by a special selection committee that required bribing.
One investigator told Diario Correo that few of the contractors wanted to come forward because they feared they had committed a crime by paying out the bribe money.
Authorities have since arrested 15 people from the criminal group, which authorities have dubbed "Los Imposters de Reconstrucción" (The Imposters of Reconstruction).
The alleged mastermind, Miguel Martínez Rivera, alias “El Ingeniero,” or “the Engineer,” faces a number of charges related to organized crime, forgery, and fraud, El Comercio reported.
InSight Crime Analysis
While the creation of a phony state agency to receive bribes from contractors was a novel scheme, it was only possible because such corruption in public works contracts has long been a part of doing business in Latin America.
In fact, the massive Odebrecht corruption scandal -- which revolves around the Brazilian corruption giant paying bribes to secure exclusive, multi-billion dollar government contracts for infrastructure projects -- has rocked Peru recently. Four of its former presidents have been placed under investigation for their suspected connections to the graft scheme.
Forced to resign from the presidency last year, Pedro Pablo Kuczynski was recently ordered into pre-trial house arrest on bribery charges stemming from Odebrecht scandal. Ollanta Humala, his predecessor, was also arrested and placed in pretrial detention on similar bribery charges, though he has since been freed. Alan Garcia, who served as Peru’s president from 1985 to 1990 and 2006 to 2011, killed himself two weeks ago when police arrived at his home. And Garcia’s predecessor, Alejandro Toledo, was also accused of accepting bribes.
Peru’s presidents, however, are hardly alone in finding themselves in hot water. A slew of political figures, lawmakers and magnates from around Latin America have been taken down by the Odebrecht investigation, known in Brazil as “Operation Car Wash” (“Operação Lava Jato”). About a dozen Latin American countries with Odebrecht construction contracts are a part of the probe, which shows no sign of waning.
Though egregious for its scale and the sums involved, the Odebrecht scandal is hardly an anomaly in Latin America, where bribery and kickbacks are often considered part of the cost of doing business. That makes public works contracts a magnet for white collar criminals and organized crime groups alike.