BROOKLYN (CN) — Appearing in federal court on a drizzly Thursday in Brooklyn, the former CEO of Brazil’s largest petrochemical company pleaded guilty to bribery conspiracy charges, saying he helped to facilitate payments to government officials to secure business deals.
Jose Carlos Grubisich, 64, led Braskem SA from 2002 to 2008. During that time, he told the court, he was asked to create an “off-the-books slush fund” that would pay an unidentified foreign official $4.3 million, in order to retain a contract with the Brazilian state-owned oil company Petrobras.
Grubisich admitted to having helped create offshore shell companies that funneled money into the fund — these companies “did not provide legitimate services to Braskem,” he said.
“I agreed to treat the payments in Braskem’s books and records to shell companies as if they were for real services,” Grubisich said Thursday, adding that he also agreed to sign certification submitted to the SEC that did not disclose the fraudulent activity.
“I knew that all of this conduct was not lawful or correct,” he said, “and I regret that I failed to fulfill my responsibilities as CEO.”
Grubisich pleaded guilty to two charges of a three-count indictment, brought against him in 2019, the first under the Foreign Corrupt Practices Act, and the second related to books and records violations.
The former executive seemed to be in good spirits in court on Thursday. He sported clean-cut silver hair, and was accompanied by his wife, who wore a black suit with a red-and-gold trim around the blazer.
Asked by U.S. District Judge Raymond J. Dearie whether he was satisfied with his representation, Grubisich replied, “Oh, yes, very much so.”
He now faces up to 10 years in prison, five for each count.
“These can be stacked, five and five,” Dearie noted.
He reminded the defendant the sentencing maximum is a nonbinding guideline: “That doesn’t mean I agree,” he said. “The likelihood is that I may very well.”
Following the appearance, Grubisich’s attorney Paul Shechtman suggested his client was a cog in a corrupt corporate environment.
“This is a plea to conduct that occurred in Brazil in 2006 and 2007, more than a decade ago,” said Shechtman, of the firm Bracewell LLP.
“Jose Carlos was not the mastermind but went along reluctantly with the corporate culture at the time in his country,” he said.
It was the head of the conglomerate Odebrecht, which had a controlling stake in Braskem, who ordered the creation of the slush fund, Grubisich said Thursday.
In Grubisich’s indictment, prosecutors described how conspirators moved money from the slush fund into a special bribery department within Odebrecht, a Brazil-based construction giant, which in turn doled out the money on Braskem’s behalf.
Employees layered transactions through that department, called the Division of Structured Operations, through multiple levels of offshore entities and bank accounts, according to the 24-page indictment.
To keep the scheme under wraps, employees used an off-book communications system, with secure emails and instant messages, codenames, and passwords.
Following a crackdown on corruption at Petrobras, Odebrecht and Braskem agreed in 2016 to pay $3.5 billion over bribery allegations brought by the United States, Brazil and Switzerland.
Brazil received 80% of that money, with the U.S. and Switzerland splitting the remainder.
Grubisich’s sentencing is scheduled for August of this year.
In the meantime, Judge Dearie agreed to modify the terms of Grubisich’s home confinement, allowing him to leave his home between 9 a.m. and 8 p.m., provided he remains within New York's Eastern and Southern Districts, covering New York City, Long Island and southern Westchester.
In March of 2020, Grubisich was released from custody on a $30 million dollar bond with $10 million cash bail. Grubisich’s attorneys said Thursday that money their client is required to forfeit during sentencing will come out of his bail.
Following the hearing, Acting Assistant Attorney General of the Justice Department’s Criminal Division Nicholas L. McQuaid said Grubisich, and other senior Braskem executives, "engaged in a large-scale, sophisticated international bribery and fraud scheme," and then lied to U.S. shareholders and authorities to hide their crimes.
“Today’s guilty plea demonstrates the Department’s commitment to holding individuals accountable for corrupt and fraudulent conduct, including those at the highest corporate echelons," McQuaid said in a statement.
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