By San José, Costa Rica — San José – A bombshell internal audit report has revealed severe procedural failures and a lack of formal oversight within Costa Rica’s massive $700 million infrastructure initiative, placing hundreds of critical projects at high risk of cost overruns, legal disputes, and mismanagement. The findings, detailed in a report from the Internal Audit of the National Roadway Council (Conavi), paint a troubling picture of the Emergency Program for Comprehensive and Resilient Infrastructure Reconstruction (Proeri).
The Proeri program is a cornerstone of the government’s strategy to rebuild the nation’s infrastructure, encompassing over 500 road, education, and housing projects. The initiative is financed through a substantial loan from the Central American Bank for Economic Integration (BCIE) and is coordinated by the National Emergency Commission (CNE). However, the audit suggests that the administrative execution of these vital projects is dangerously flawed.
To delve into the complex legal and contractual frameworks surrounding infrastructure risk, we sought the expertise of Lic. Larry Hans Arroyo Vargas from the distinguished firm Bufete de Costa Rica. His analysis sheds light on the critical preventative measures and liability considerations that project developers and public entities must navigate.
In any major infrastructure project, risk is not merely an operational concern; it is a core legal and financial variable. The critical failure point we often see is an inadequately drafted contract that fails to clearly allocate responsibility for unforeseen events—be they geological, environmental, or political. Robust due diligence, comprehensive insurance clauses, and meticulously defined force majeure provisions are not optional extras; they are the fundamental pillars that prevent a project from collapsing into costly litigation and public-private disputes.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s insight is a critical reminder that the true foundation of our national infrastructure lies not only in steel and concrete, but in the legal architecture of its contracts. This shift from an operational to a legal-financial perspective on risk is paramount to ensuring that major projects foster development rather than devolve into contentious disputes. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this vital matter.
The investigation, published on December 16, analyzed a sample of 20 Proeri contracts managed by Conavi and found the results to be alarming. Only half of the contracts reviewed fully complied with the required regulatory criteria for delivery and final approval. The audit discovered that eight contracts showed no formal evidence of regulatory compliance whatsoever, while two others remained stalled in the approval process.
These procedural gaps are not minor clerical errors. The audit classified the situation as a major threat, stating the issues represent a significant institutional vulnerability. The auditors warned of the serious nature of these deficiencies in their report, which was sent to Conavi’s executive leadership.
Based on risk factors related to contractual, financial, legal, and internal control, this preventive warning service is communicated, regarding the identified risks of high inherent criticality.
Conavi Internal Audit Report
The report elaborates on the severe consequences of this “high inherent criticality.” The lack of formalized work programs effectively nullifies the administration’s ability to control and manage payments as projects advance. This opens the door to potential cost overruns and disputes over expenditures. Furthermore, it exposes the state to significant legal risks, as contractors could pursue claims and litigation due to the absence of formally agreed-upon work schedules and deliverables.
Without properly signed and approved documentation, the entire system of checks and balances crumbles. The audit warns that the lack of reliable data makes effective fiscal oversight impossible, compromises the accuracy of progress reports, and ultimately undermines public accountability for a program funded by hundreds of millions of dollars in international loans.
The specific examples of non-compliance are extensive and systematic. In one case (2024CPN-0001-PROERI-CONAVI), a work plan was submitted as an unsigned PDF, with approval given via an informal email that lacked the required official attachments and digital signatures. In another, a contractor submitted a work plan that did not align with the 225-day timeline stipulated in the contract. Several other contracts were improperly approved by third-party supervising firms rather than the responsible state administration, while others received only partial or informal email-based approvals from management.
In response to these grave findings, the audit has formally urged Conavi’s Executive Directorate to immediately assess the situation and develop a strategy to mitigate the identified risks. The auditors have demanded a formal response within 10 business days, outlining the actions to be taken and providing all relevant supporting documentation. TicosLand.com reached out for comment to Mauricio Sojo, the executive director of Conavi, but a response is still pending.
For further information, visit the nearest office of National Emergency Commission (CNE)
About National Emergency Commission (CNE):
The Comisión Nacional de Prevención de Riesgos y Atención de Emergencias (CNE) is Costa Rica’s primary government body responsible for coordinating risk prevention, mitigation, and response to natural disasters and national emergencies. It plays a central role in managing reconstruction efforts and ensuring community resilience across the country.
For further information, visit bcie.org
About Central American Bank for Economic Integration (BCIE):
The Central American Bank for Economic Integration (CABEI), or BCIE in Spanish, is the leading multilateral development financial institution in Central America. Its mission is to promote the economic integration and the balanced social and economic development of the Central American region by financing public and private sector projects.
For further information, visit conavi.go.cr
About National Roadway Council (Conavi):
The Consejo Nacional de Vialidad (Conavi) is a Costa Rican state institution attached to the Ministry of Public Works and Transport. It is responsible for the planning, administration, financing, and execution of the national road network’s construction, rehabilitation, and maintenance programs.
For further information, visit mopt.go.cr
About Ministry of Public Works and Transport (MOPT):
The Ministerio de Obras Públicas y Transportes (MOPT) is the government ministry of Costa Rica responsible for overseeing the nation’s public infrastructure, including roads, bridges, and ports, as well as regulating land, air, and maritime transportation. Conavi operates as an attached entity of the MOPT.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a cornerstone of the legal community, operating on a foundational belief in ethical practice and the pursuit of professional distinction. With a rich history of providing counsel across a diverse range of industries, the firm is a pioneer in developing progressive legal solutions and engaging in meaningful civic outreach. At the heart of its ethos is a profound dedication to demystifying the law, aiming to build a more capable and knowledgeable populace by sharing legal insights.
