Billionaire Sarmiento’s Companies to Pay $60 Million in US Graft Probe

2023-08-11 11:22

Firms controlled by the billionaire Sarmiento family of Colombia agreed to pay fines of about $60 million to

Firms controlled by the billionaire Sarmiento family of Colombia agreed to pay fines of about $60 million to the US Securities and Exchange Commission and the Justice Department for bribes paid by one of its units for a highway project dating back nearly a decade.

Grupo Aval Acciones y Valores SA and its subsidiary Corporacion Financiera Colombiana SA, known as Corficolombiana, agreed to pay $40 million to the SEC to settle investigations and another $20 million to the DOJ to settle criminal charges, according to an SEC statement.

The probe is linked to wide-ranging corruption around disgraced Brazilian construction firm Odebrecht SA (now known as Novonor) which admitted to bribing officials across Latin America to obtain contracts for projects. Corficolombiana, which had a minority stake in a highway project known as Ruta del Sol II, was accused, along with its partner, of bribing Colombian officials between 2012 and 2015 with more than $23 million to secure a contract to extend the road, according to the DOJ.

“The DOJ and SEC recognized Corficolombiana’s and Grupo Aval’s extensive cooperation with the investigations,” Aval said in a statement. “Corficolombiana and Grupo Aval consider this painful chapter closed.”

Luis Carlos Sarmiento Angulo, the 90-year-old patriarch of the family, built the Aval empire which includes Banco de Bogota, the third-biggest bank in Colombia by assets; Porvenir, the largest pension fund manager; investment-holding company Corficolombiana and a brokerage. The group also has investments in soybean oil, cattle, fisheries, and rubber.

Sarmiento has a fortune of $6.7 billion, according to the Bloomberg Billionaires Index. His son, Luis Carlos Sarmiento Gutierrez, is chief executive officer at Aval and chairman of Corficolombiana.

Aval shares have slumped 46% since Dec. 2018 when the conglomerate said the US opened the investigation, compared to a 15% decline for the benchmark Colcap index. Aval, which has American Depositary Receipts, has a market capitalization of $3 billion.

“Today’s resolution – the first-ever coordinated with Colombian authorities in a foreign bribery case – reflects the Justice Department’s commitment to working shoulder-to-shoulder with our foreign partners to combat transnational corruption and hold accountable companies that brazenly pay bribes for economic gain,” the DOJ said.