Galvao Engenharia, one of the largest engineering companies in Brazil, has been forced to file for bankruptcy protection in the aftermath of the Petrobras corruption scandal. It has ben claimed that an alliance of engineering and construction companies had been inflating prices that they were charging Petrobras and using the surplus to pay bribes. Petrobras has now ceased payments to Galvao, however, the engineering firm’s parent company, Grupo Galvao, has denied any involvement in the apparent corruption. The oil giant is now said to we millions of dollars to Galvao who have had to file for bankruptcy protection. They now have a period of 60 days to formulate a plan for their recovery.
The implications of the bankruptcy news are felt beyond Galvao Engenharia. Brazil’s economy which is currently on the brink of stagnation or even recession, may also feel the effects. Due to the fact that a lot of the country’s main construction firms are involved in the corruption scandal at Petrobras, infrastructure projects that are desperately needed in order to facilitate growth of the Brazilian economy, may come to a halt if the construction firms follow the same path as Galvao.