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Peru prosecutors have not ruled out probing Grana y Montero -source

| LIMA, March 28

LIMA, March 28 Public prosecutors in Peru have not ruled out investigating the country's biggest builder, Grana y Montero , or people linked to the company as part of an investigation into its scandal-plagued Brazilian partner Odebrecht, a source in the attorney general's office said on Tuesday.

The Justice Department said late on Monday that prosecutors in the attorney general's office had rejected its request to include Grana's former chairman, among others, in an inquiry that aims to uncover who was involved in $29 million in bribes that Odebrecht has acknowledged distributing in Peru.

Grana's shares were up by more than 10 percent on Tuesday after the announcement, which helped lift expectations that the company might avoid getting ensnared in Latin America's biggest graft scandal and may even find work helping to rebuild parts of Peru hit hard by recent floods and mudslides.

But the source in the attorney general's office said it was premature to conclude that the Odebrecht inquiry would not be broadened in the future to incorporate other suspects, including potentially Grana executives or former executives, if the evidence and prosecutorial strategy merits doing so.

The source was not authorized to comment and spoke on condition of anonymity.

Grana could not immediately provide comment. It said in a statement to Peru's market regulator on Tuesday that it did not expect to see its businesses affected by a recent government decree aimed at barring corrupt companies from public works contracts because none of its executives have been convicted of graft.

Grana has partnered with Odebrecht on several major public work projects, including highways, toll roads and a metro line in Lima. Grana saw its shares plummet after Odebrecht admitted in December to distributing hundreds of millions in bribes across Latin America.

Last month, the former head of Odebrecht in Peru was quoted in a magazine telling prosecutors that Grana and its other local partners on two highway contracts were aware of a deal to bribe former President Alejandro Toledo and knew they would have to "assume their part."

Grana has repeatedly denied knowing about Odebrecht's kickback schemes in Peru and has vowed to cooperate with any investigation. The company has said it tasked an independent company to conduct an internal probe into its dealings with Odebrecht.

Toledo has denied wrongdoing. (Reporting By Mitra Taj; Editing by Bill Trott)

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