Peruvian Lawyers Face Decades in Prison Over Alleged Odebrecht Arbitration Scheme

Lima, Peru – A sweeping corruption case linked to Brazilian construction giant Odebrecht has reached a critical juncture as Peruvian prosecutors seek lengthy prison sentences – up to 25 years and four months – for a group of lawyers and officials accused of manipulating public works arbitrations between 2011 and 2015.

The accused, including prominent legal figures Richard Martín, Humberto Abanto, Franz Kundmüller, Fernando Cantuarias, and Emilio Cassina, stand accused of forming a criminal organization dedicated to fraudulently securing favorable arbitration outcomes for Odebrecht and other companies. Prosecutors allege this was achieved through a systematic bribery scheme targeting arbitrators and officials within the Ministry of Transportation and Communications.The alleged scheme centered around 17 arbitration processes related to five major public works projects: the South and North Interoceanic Highways (IIRSA SUR & NORTE), the Cuñumbuque-shoes-San José de Sisa road (Empalme PE-5N), and the callejón de Huaylas-Chaca-San Luis road. According to the prosecutor’s office, Odebrecht sought – and illegally obtained – recognition of payments not originally stipulated in their construction contracts, leveraging arbitration to secure these funds.

“Prior payment of bribes to the arbitrations and officials…occurred,” stated the Prosecutor’s Office, alleging that illicit funds were then used to bolster the personal wealth of those involved.

This case, dubbed the “Odebrecht referees” scandal, represents the 27th accusation filed by Peru’s Special Equipo Lava Jato – a dedicated task force investigating the far-reaching odebrecht corruption network – before the Judiciary.

Recent developments saw the seventh National preparatory Inquiry Court reject a request from lawyer Humberto Abanto to dismiss the criminal proceedings, signaling the case is moving forward.

Evergreen Insights: The Enduring Threat of Corruption in Infrastructure

The Odebrecht scandal,which has reverberated across Latin America,serves as a stark reminder of the vulnerabilities inherent in large-scale infrastructure projects. Arbitration, intended as a neutral dispute resolution mechanism, can be easily exploited when compromised by corruption.

This case highlights several key risk factors:

lack of Openness: Opaque contracting processes and limited public oversight create fertile ground for illicit activities.
Conflicts of Interest: The alleged involvement of arbitrators raises serious questions about impartiality and the need for robust conflict-of-interest regulations.
Weak Institutional Oversight: the alleged bribery of officials within the Ministry of Transportation and Communications underscores the importance of strong internal controls and self-reliant regulatory bodies.
The role of Legal Professionals: The accusations against prominent lawyers demonstrate that corruption can permeate all levels of a system, even those entrusted with upholding the law.

The ongoing prosecution in Peru is a crucial test of the country’s commitment to combating corruption and ensuring accountability in public works. The outcome will likely have important implications for future infrastructure progress and the integrity of arbitration processes throughout the region.

What specific racketeering activities is Abanto and Associates accused of engaging in?

Prosecutor Charges Abanto and Associates with Criminal Association

Allegations of Racketeering and Fraud

On August 8, 2025, a prosecutor’s office announced formal charges against Abanto and Associates, alleging the firm operated as a criminal organization. The indictment details accusations of racketeering, wire fraud, and money laundering spanning several years. These charges stem from an extensive investigation into the firm’s business practices, especially concerning its handling of client funds and alleged deceptive marketing tactics. The core of the case revolves around accusations that Abanto and Associates systematically defrauded investors and clients, diverting funds for personal gain.

Key Individuals Named in the Indictment

The indictment names several key individuals associated with Abanto and Associates, including:

Rodrigo Abanto: The founder and principal of the firm, accused of orchestrating the criminal enterprise.

Isabela Cortez: Chief Financial Officer, alleged to have overseen the fraudulent financial transactions.

Marco Silva: Head of Sales and Marketing, accused of implementing deceptive sales strategies.

Several unnamed associates: Individuals believed to have knowingly participated in the scheme.

Prosecutors claim Abanto held ultimate obligation for the alleged criminal activities, directing Cortez and silva to carry out the fraudulent operations. The investigation is ongoing, and further arrests are anticipated.

The Nature of the Alleged Criminal Enterprise

The prosecution argues that Abanto and Associates functioned as a sophisticated criminal enterprise, characterized by a clear hierarchy and a systematic pattern of illegal activity. The indictment outlines the following alleged elements of the enterprise:

1. Misleading Investment Schemes: Clients were allegedly lured into high-risk investments with false promises of guaranteed returns.
2. Diversion of Funds: Client funds were allegedly diverted to shell corporations and used for personal expenses, including luxury vehicles and real estate.
3. Obstruction of Justice: Attempts were allegedly made to conceal evidence and intimidate witnesses.
4. Money Laundering: Illegally obtained funds were allegedly laundered through a network of offshore accounts.

The prosecution intends to present evidence demonstrating a pattern of racketeering activity, establishing that Abanto and Associates engaged in a sustained criminal operation.

Potential Penalties and Legal Ramifications

If convicted, the individuals named in the indictment face significant penalties, including:

Lengthy Prison Sentences: Racketeering and fraud charges carry substantial prison terms, potentially exceeding 20 years per count.

Asset Forfeiture: The government is seeking forfeiture of all assets acquired through illegal means, including real estate, vehicles, and financial accounts.

Restitution to Victims: Defendants may be ordered to pay restitution to victims who suffered financial losses as a result of the alleged fraud.

Disbarment: Rodrigo Abanto, if a licensed professional, faces potential disbarment.

The legal ramifications extend beyond criminal penalties. Civil lawsuits from defrauded investors and clients are expected to follow, potentially resulting in substantial financial liabilities for Abanto and Associates.

impact on Clients and Investors

The charges have sent shockwaves through the client base of Abanto and associates. Many investors are now facing significant financial losses and are uncertain about the future of their investments. the prosecutor’s office has established a dedicated hotline and website to provide data and assistance to victims.

Victim Support Resources: A dedicated task force is assisting victims in navigating the legal process and recovering lost funds.

Investment Recovery Options: Legal experts are advising clients on potential avenues for recovering their investments, including filing claims in bankruptcy proceedings.

Financial Counseling: Resources are available to help clients manage the financial fallout from the alleged fraud.

SEC Investigation: The Securities and Exchange Commission (SEC) conducted a preliminary investigation into the firm’s investment practices.

State Regulatory Actions: State regulators issued cease-and-desist orders, alleging violations of securities laws.

Consumer Protection Complaints: Numerous complaints were filed with consumer protection agencies regarding misleading marketing materials and aggressive sales tactics.

The Role of Whistleblowers

The investigation was significantly aided by information provided by whistleblowers – former employees of Abanto and Associates who came forward with evidence of wrongdoing. These individuals played a crucial role in uncovering the alleged fraud and providing prosecutors with the necessary information to build their case. Whistleblower protection laws are designed to encourage individuals to report illegal activity without fear of retaliation.

Ongoing Investigation and Future Developments

The investigation remains active, with prosecutors continuing to gather evidence and interview witnesses. Additional charges and arrests are possible as the investigation progresses. The trial date has not yet been set, but legal experts anticipate a lengthy and complex legal battle. the case is expected to draw significant media attention and could have far-reaching implications for the financial services industry. the focus will be on proving the systemic nature of the alleged fraud and