Unprecedented $3.6B Fine Ends Global-Bribery Case

(CN) – Settling the largest foreign-bribery case in history, Brazilian companies Odebrecht and Braskem agreed Wednesday to pay at least $3.5 billion to authorities in the United States, Brazil, and Switzerland.

Odebrecht, one of Brazil’s biggest construction companies, agreed to a criminal fine of $4.5 billion, but says it can only afford to pay $2.6 billion. Of the total, Brazil will receive 80 percent, and the U.S. and Switzerland will each receive 10 percent.

Petrochemical firm Braskem, which is jointly owned by Odebrecht and the Brazilian state oil company Petrobras, will pay $957 million, with Brazil to receive 70 percent, and the U.S. and Switzerland to get 15 percent each. Informations and pleas against the two companies were filed Wednesday with a federal judge in Brooklyn. Details of the settlement appear in a statement by the Securities and Exchange Commission, which filed its own action against Braskem in Washington. The $957 million figure includes $325 million in disgorgement, just $65 million of which will go to the SEC. The other $260 million will go to Brazilian authorities.  Braskem also agreed to pay more than $632 million in criminal penalties and fines, and it must retain an independent corporate monitor for at least three years.

“These resolutions are the result of an extraordinary multinational effort to identify, investigate and prosecute a highly complex and long-lasting corruption scheme that resulted in the payment by the defendant companies of close to a billion dollars in bribes to officials at all levels of government in many countries,” U.S. Attorney Robert Capers said in a press release.

Odebrecht and Braskem’s settlement comes out of investigation named for the car wash where some of the money laundering took place. Former Brazilian president Dilma Rousseff was impeached in August over her connections to the corruption scandal.

As part of the settlement, Odebrecht admitted to running a massive bribery scheme that began in 2001. Since that time, the company paid approximately $788 million in bribes to government officials and political parties around the world to win business contracts.

The Justice Department says the scheme required an extraordinarily complex network of shell companies and off-shore bank accounts to account for and disguise the bribes.

Braskem got involved in the scheme in 2006, prosecutor say, paying about $250 million into Odebrecht’s system, primarily to Brazilian politicians, as well as officials of Petrobras.

“Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit – a ‘Department of Bribery,’ so to speak – that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents,” Deputy Assistant Attorney General Sung-Hee Suh said in as statement.

The department was officially called the “Division of Structured Operations,” and reported to the company’s highest levels of management.

To conceal its activities, the department used “entirely separate and off-book communications system, which allowed members of the Division of Structured Operations to communicate with one another and with outside financial operators and other co-conspirators about the bribes via secure emails and instant messages, using codenames and passwords,” the Justice Department says.

Odebrecht’s former CEO Marcelo Odebrecht was convicted on corruption charges last year. Now a state’s witness, Odebrecht is expected to be released from prison by the end of next year as a reward for his cooperation.

The $4.5 billion fine against Odebrecht already represents a 25 percent reduction due to the company’s full cooperation with the U.S. investigation, while Braskem was given a 15 percent reduction.

Odebrecht’s claimed inability to pay the full amount will be subject to a full review by U.S. and Brazilian authorities, and is expected to be complete by March 2017.

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