Investigations

Influential economist defended construction giant. Secretly it paid his firm millions

As questions swirled about the ballooning price tag for a $2 billion coal-fired power plant in the Dominican Republic, one of the strongest defenders of the project was a prominent Dominican economist named Andrés Dauhajre.

Writing in the newspaper El Caribe in February 2017, Dauhajre called criticism of the Punta Catalina project’s costs “the best-selling lie in recent years.”

But Dauhajre’s accounting of the project left out one detail.

He didn’t disclose that he had been paid more than $3 million by Odebrecht S.A., the Brazilian construction firm that had won a 2013 contract to build the plant. That $3 million was on top of the money his consulting firm had previously received from the government to help review the bids of Odebrecht and others.

Those payments were among the revelations in a tranche of leaked data and documents obtained by the International Consortium of Investigative Journalists showing the inner workings of Odebrecht’s Drousys system, an alternative accounting system the company used to keep track of $788 million worth of bribes and other off-the-books payments it doled out to politicians and government officials in 12 countries in Latin America and Africa.

Reporters from McClatchy, the Miami Herald and el Nuevo Herald are part of a team of more than 50 journalists in 10 countries who analyzed the leaked documents for more than four months.

The Drousys system showed payments connected to several projects in the Dominican Republic, including more than $3.3 million in 2014 paid to a shell company associated with Dauhajre, called Baker Street Financial Inc.

That same company — with Dauhajre listed as the sole director — purchased a $2 million midtown Manhattan apartment in December 2015.

When confronted with records of the payments and property records linking him to the shell company, Dauhajre acknowledged that he had been paid by the Brazilian company for “financial consulting services,” helping the company shore up financing for the coal plant when its original financing fell through.

“Baker Street Financial Inc. successfully and effectively provided the advisory service requested by Odebrecht during the years 2014 and 2015,” Dauhajre said in the statement. “Several of the financing options proposed by Baker Street Financial Inc. to Odebrecht were presented and eventually accepted by the Dominican State, allowing the development of the Project to materialize.”

In the Dominican Republic alone, Odebrecht gave out $92 million to government officials and their intermediaries, part of a much broader pattern of corruption involving assorted countries, according to Odebrecht’s December 2016 plea agreement with the U.S. Department of Justice. Odebrecht S.A. agreed to pay a record $2.6 billion fine in the case.

So far, the Dominican Republic’s attorney general has determined that many of Odebrecht’s 17 projects in the country were associated with graft.

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Andrés Dauhajre Hijo’s consulting firm helped the Dominican government evaluate proposals to build the Punta Catalina coal-fired plant. When Odebrecht won the contract, the firm was paid millions by the company for its advice.

One exception? The Punta Catalina project, which the attorney general wrote in June 2018 showed “no evidence of perks or improper exchanges.”

The leaked Drousys documents actually show payments totaling more than $39 million in connection with the plant, including the payments to Dauhajre’s company.

In a statement Wednesday night, Odebrecht S.A. pushed back on the broad findings of the collaborative reporting project.

“It is wrong to conclude there were omissions by the company or that all the projects and sums mentioned in these documents were tied to acts of corruption,” the statement said, not mentioning any particular country.

Odebrecht’s top lobbyist in the country, Ángel Rondón Rijo, was charged with corruption in the Dominican Republic and placed on the U.S. sanctions list in December 2017.

He is one of six people currently facing trial in the Dominican Republic’s Supreme Court in connection with the Odebrecht S.A. case, along with former Minister of Public Works Víctor Díaz Rúa, Sen. Tommy Galán Grullón, and a former president of the Senate, Andrés Bautista García.

So far, none has been convicted of any crime, a sharp contrast with other countries in the region. The Odebrecht scandal has toppled leaders in Brazil and Peru while former Ecuadorian Vice President Jorge Glas is serving six years in prison for taking bribes.

“I think some countries have done a better job than others holding people accountable,” said James “Wally” Brewster, former U.S. ambassador to the Dominican Republic. “I think there’s still opportunity in the countries involved to hold people accountable and trust those governments will continue with their indictments and convictions. If not, the corruption will continue.”

The attorney general, Jean Alain Rodriguez Sanchez, declined to comment on the payments Dauhajre received through the Drousys system and, instead, requested that the consortium of journalists turn over the leaked material to his office. He cited exemptions to sharing public information when such information could “compromise the procedural strategy” of the case or violate the “duty of secrecy.”

Dauhajre’s Fundación Economía y Desarrollo was one of three firms that were hired to provide an economic analysis of bids for the Punta Catalina contract. The Dominican government ended up agreeing to pay twice as much to the contractor deemed least qualified when it chose Odebrecht to build the Punta Catalina plant, el Nuevo Herald reported in 2016.

According to the report, Odebrecht later charged overinflated fees for its work, including huge salary rates that in some cases surpassed by 1,000-fold the minimum wages stipulated by the government for the same professions.

Days before he penned his February 2017 defense of the project in El Caribe, Dauhajre defended his 2013 analysis of Odebrecht’s bid before a commission investigating whether the contract had been improperly awarded. Dauhajre didn’t disclose that he had, by that point, been paid millions by the Brazilian company through Baker Street Financial.

Several years earlier, the same shell company also purchased an apartment in one of Miami’s Icon Brickell Towers. The apartment was put up for sale for $1.15 million in 2014 by a real estate agent sharing the same last name as the economist.

The Brazilian construction company Odebrecht isn't a household name in much of the U.S., but the work of its Miami-based subsidiary has shaped South Florida.

Reached by phone, the agent, Ana Dauhajre, confirmed that she was related to Andrés Dauhajre, but declined to elaborate on the exact nature of the relationship or confirm whether the economist was the owner of the condo.

Dauhajre belongs to a prominent family in the Dominican Republic and it’s not uncommon for well-off Dominicans to own property in Miami. The condo remains unsold and is still owned by Baker Street Financial.

With the backing of Dauhajre’s financial plan, the Dominican government, Odebrecht S.A., and other partners in the coal-fired plant were seeking loan guarantees from the U.S. Export-Import Bank. But that idea apparently died when the Obama administration discouraged use of coal as a power source in its effort to limit global carbon emissions.

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The shell company that was paid millions by Odebrecht for advice shelled out $2 million for a condo in this Manhattan building. The sole director of the company was Andrés Dauhajre Hijo. Kevin G. Hall

Dauhajre said that he was hired, in part, because Odebrecht’s plan to obtain a loan through the U.S. Export-Import Bank fell through after the U.S. agency changed its policies on backing coal plants in December 2013 to better align itself with the Obama administration.

In February 2011, Odebrecht did succeed in winning Ex-Im Bank loan guarantees for another controversial project in the Dominican Republic called Autopista del Coral, which has featured prominently in the corruption investigation. The Drousys logs are chock-full of references to the 44-mile road, which connects the Dominican capital, Santo Domingo, to east coast beach towns such as Punta Cana, suggesting payoffs by virtue of what the parallel accounting system was built to handle.

The loan guarantee covered $36.5 million in financing for the toll road being built with the help of Odebrecht Global Solutions, one of a number of Miami-based subsidiaries of the Brazilian-based conglomerate. It was Odebrecht’s first use of the U.S.-backed loan guarantees, and a senior official at the agency said there have not been performance issues and the Ex-Im Bank’s remaining exposure — the unpaid portion of loan guarantees — is around $12.8 million.

An investigation led by the International Consortium of Investigative Journalists reveals that Odebrecht’s cash-for-contracts operation was even bigger than the Brazilian company has acknowledged. Here's a look into the bribery scandal.

The portion of the work financed with help from the Ex-Im Bank has actually been completed. In 2015, an Ex-Im employee named Johnny Gutierrez pleaded guilty to accepting $78,900 in bribes to approve projects in the Dominican Republic, but the bank confirmed that he played no role in the loan for Autopista del Coral.

Alicia Ortega Hasbún reports for Grupo Sin in the Dominican Republic.

Reporting partners Sasha Chavkin of ICIJ and Antonio Maria Delgado of el Nuevo Herald contributed. Ben Wieder: 202-383-6125, @benbwieder; Kevin G. Hall: 202-383-6038, @KevinGHall.

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This project was produced in partnership with the International Consortium of Investigative Journalists.

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