Colombian Conglomerate Settles US Corruption Charges for $80 Million

Published: 16 August 2023

Luis Carlos Sarmiento AvalGroupLuis Carlos Sarmiento, one of the wealthiest men in Colombia, is the main shareholder of Grupo Aval. (Photo: Analitico Colombia, Flickr, License)

By Lieth Carrillo

Colombian conglomerate Grupo Aval and its bank subsidiary have agreed to pay approximately US$80 million to settle corruption charges brought by U.S. authorities that have alleged the conglomerate, along with a joint venture partner, paid at least $28 million to Colombian government officials to secure an extension of a highway construction contract.

According to statements from the U.S. Department of Justice and the Securities and Exchange Commission (SEC), Grupo Aval and its bank subsidiary, Corporación Financiera Colombiana S.A. (Corficolombiana), were accused of violating the U.S. Foreign Corrupt Practices Act.

Corficolombiana and its joint venture partner, the notorious Brazilian construction company Odebrecht, were awarded a contract by the Colombian government for the construction of a 328-mile highway project. The U.S. Department of Justice and the SEC allege that the two entities paid the mentioned sum to government officials in order to secure the rights to construct a highway toll road.

This arrangement enabled Corficolombiana to generate illicit profits exceeding $28 million.

The Justice Department indicated that Corficolombiana has committed to ongoing cooperation in any active or future criminal investigations pertaining to this matter. The company has also agreed to bolster its compliance program and provide updates to the Department concerning remediation efforts and the implementation of compliance measures.

“Lax control environments are conducive to misconduct, as illustrated in this case where bribes were facilitated through payments tied to invoices without proper supporting documentation, as well as contracts for services that were vaguely defined and typically managed internally rather than by third parties,” remarked Charles Cain, the SEC’s FCPA Unit Chief. “This case once again underscores the significance of issuers maintaining robust internal accounting controls over third-party payments.”

Corficolombiana will pay a criminal penalty of $40.6 million, in addition to over $40 million in disgorgement and prejudgment interest.

Odebrecht has been at the center of Latin America's largest corruption scandal, which originated in Brazil with Operation Lava Jato. This investigation exposed a network of bribery and corruption involving officials, politicians, and business figures.

The subsequent probe revealed that this corruption scheme extended across the continent and beyond.

In response to the developments, Colombian President Gustavo Petro highlighted the problematic connections between judicial entities in Colombia and Grupo Aval. He urged political parties to scrutinize whether their top leaders were involved in corrupt practices and called on them to return any contributions received from the conglomerate.