WASHINGTON - The Inter-American Development Bank Group has announced the imposition of a twenty-four-month Conditional Non-Debarment to ECOSAC AGRÍCOLA S.A.C. and its subsidiary in connection with allegations of Fraudulent Practices relating to an IDB Invest loan in Peru.
The IDB Invest financing, approved in 2021, sought ECOSAC’s expansion in capital investment to increase crop production and the efficiency of their operations, an injection in working capital and refinancing of the company’s debt (the “Project”).
In December 2023, the IDB Group’s Office of Institutional Integrity (OII) received an allegation of potential Prohibited Practices in the Project.
Between June and August 2024, Atitlán Grapes S.L.U. (“Grapes”), a Spanish company, acquired and gained control of ECOSAC well after the events subject to investigation took place. Grapes was not involved in the conduct under investigation and it is not subject to the sanction. In response to OII’s investigation, ECOSAC, through its new majority shareholder, proactively conducted an internal investigation, disclosed relevant evidence and additional facts to OII, adopted other mitigating measures and requested a negotiated resolution of the matter.
The sanction is the result of a Negotiated Resolution Agreement (the “Settlement”) between the IDB Group and ECOSAC in accordance with the IDB Group’s Sanctions Procedures. For the purposes of the Settlement, ECOSAC admitted OII's findings that it engaged in a fraudulent practice by making false financial representations to IDB Invest between 2022 and 2023 (before its acquisition by Grapes), in order to conceal unauthorized payments to shareholders.
Under the terms of the Settlement, ECOSAC commits to report on its compliance program through an independent monitor and commits to continue cooperating with OII, including conducting internal investigations related to IDB Group-financed activities. In the event ECOSAC fails to fulfill its obligations, the sanction will convert into a debarment period of 4 years or until the conditions are met, whichever occurs earlier.
The Settlement was negotiated by OII in accordance with the IDB Group's Sanctions Procedures. Settlements of this nature are used by the IDB Group and other multilateral development banks as an effective means to resolve investigations related to Prohibited Practices in exchange for cooperation and disclosures of systemic integrity risks.
About the IDB Group
The IDB Group is the leading source of development finance for Latin America and the Caribbean. It helps to improve lives by providing financial solutions and development know-how to public and private sector clients. The Group comprises the IDB, which has worked with governments for more than 60 years; IDB Invest, which serves the private sector; and IDB Lab, which tests innovative ways to enable more inclusive growth.
The Office of Institutional Integrity (OII) has a central role in the IDB Group’s commitment to integrity through its mandate to conduct investigations of Prohibited Practices and provide prevention support to operational units.