Arcadis co-operating with $6.4bn Brazilian fraud probe

Dutch engineering firm Arcadis has confirmed that its staff in Brazil are helping police with their investigation into the alleged misuse of funds on a $6.4bn water management project in the north of the country.

The news came after Brazilian federal police arrested four people on Friday, 11 December, including the chief executive of engineering group OAS, in a new probe of suspected price-fixing and kickbacks on the water project, Reuters reported.

The company announced on Monday, 14 December, that it was assisting in "a broad investigation into a number of construction companies that are active in the São Francisco project".

It said: "Arcadis is fully co-operating with the Federal Authorities who visited the Arcadis offices in São Paulo and the house of one of its project managers on Friday 11 December. Also, as part of its standard business compliance policy, Arcadis has initiated its own assessment."

A spokesperson told the Reuters news agency that Arcadis was unsure as to whether it was a target of the investigation. Brazilian police arrested four people on Friday on suspicion of diverting funds to shell companies, but none were Arcadis employees.

The share price of Arcadis fell 19% after its announcement on Monday.

Brazil’s federal authorities are investigating the largest water infrastructure project in the country. It involves the construction of 720km of canals, as well as aqueducts, tunnels and reservoirs in the country’s drought-prone north-eastern states of Pernambuco, Ceará, Paraíba and Rio Grande do Norte.

Work on the scheme began in 2006, and its estimated costs have nearly doubled.

Arcadis’ subsidiary, Arcadis Logos, is involved in a joint venture with Brazilian engineer Concremat. It is acting as programme manager working directly for the Brazilian Ministry of National Integration and has about 100 staff assigned to the scheme.

Arcadis Logos has been working on the scheme since 2006, and in 2014 it was awarded a 33-month extension with a value of $35m.

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