Keeping righteous sermon in check, judge orders Brazilian oil exec to prison

BROOKLYN (CN) — Insisting that he had no illusions about the pervasiveness of the criminality at play, a federal judge nevertheless imposed a nearly two-year prison term Tuesday on Jose Carlos Grubisich, the former CEO of Brazil’s largest petrochemical company, for its deterrent effect. 

“It’s hard to conceive of one judge sitting in Brooklyn, New York, having an impact on a system that is that corrupt,” U.S. District Judge Raymond Raymond J. Dearie remarked, noting that the schemes described in Grubisich's indictment were so widespread, they were “business-as-usual corruption.” 

Dearie acknowledged that the court is confronting a system where “everyone accepted it, everyone played ball.” But he also noted that playing ball in America meant following the United States’ rules, and failing to do so has consequences. 

“I’m going to spare you all the homily on the righteousness of corporate America,” Dearie said at one point. “We have our scoundrels too.” 

Grubisich asked for leniency, offering a tearful statement in which he described the corrupt culture that he stepped into as he left a job in France to join Braskem SA. It had been his dream, the Brazilian-born former executive said, to return to help develop his home country.

But even as that dream turned into a “personal nightmare,” Grubisich told the court, “I have no excuses.” 

As part of guilty plea to bribery conspiracy charges in April, the 64-year-old Grubisich admitted to helping to divert $250 million from Braskem into a secret slush fund to get business with Petrobras, the Brazilian state-owned oil company.

Judge Dearie acknowledged at Tuesday's hearing that the former oil executive had been a generous humanitarian on one hand, and “a criminal on the other.” 

Indeed defense attorney Paul Shechtman, of the firm Bracewell LLP, noted that Grubisich created 10,000 jobs for Brazilians and helped thousands of families during his tenure at Braskem.

“He also returned to help develop his home country, and in that he succeeded beyond words,” Shechtman said. 

Grubisich’s work building a world-class petrochemical facility “lifted them out of poverty into a middle class life,” Shechtman said. His client also worked on hospital and charity boards, helped to create Brazil’s National Health Surveillance Agency, and spearheaded efforts to recycle contaminated materials, Shechtman said. 

For Dearie, however, the lack of a prison sentence would make a statement just the same as a sentence itself.

And while the judge said he was generally skeptical of imposing a sentence as a general deterrent, things may be different in white-collar world.

“I think general deterrence here has some length,” Dearie said.

In addition to serving a prison term of 20 months, Grubisich must pay a $1 million fine and $2.2 million in forfeiture. Grubisich’s wife, sitting in the front row of the courtroom gallery, dabbed her eyes with a tissue after her husband was sentenced. 

Grubisich's 24-page indictment describes a conspiracy that ran from 2002 to 2014 in which money was moved from Braskem's slush fund into a special bribery department within Odebrecht, a Brazil-based construction giant, that in turn doled out the money on Braskem’s behalf. 

The scheme had “all the usual trappings of fraud,” Dearie said; it “almost sounds like a James Bond film.” Prosecutors note that employees used an off-book communications system complete with secure emails and instant messages, codenames, and passwords to keep the scheme under wraps. Multiple levels of offshore entities and bank accounts allowed employees to layer transactions through the bribery department, officially called the Division of Structured Operations. 

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.

At Grubisich's sentencing, Assistant U.S. Attorney Lorinda Laryea urged the court to consider not just the fraud that Grubisich had participated in, but also “where he sat” as CEO of Braskem. 

This wasn’t a single lapse of judgment or one bad decision,” Laryea said. “He enabled, facilitated, approved the criminal conduct, and he was involved in instructing his subordinates to carry out the scheme.” 

Laryea agreed that Grubisich’s personal life should be taken into account. “But here, the defendant's corruption and fraud also caused serious damage to his country,” Laryea said.

As noted by the Justice Department, Grubisich remained a Braskem stockholder after he stepped down as CEO in 2008, while continuing to serve Odebrecht and Braskem in other capacities.

Prosecutors dismissed the remaining charge on the indictment, which included three counts, two of which Grubisich pleaded guilty to. 

Shechtman, speaking to reporters following the hearing, said he and his co-counsel had gotten to know their client’s character while representing him. 

“Ed Kim and I have come to know this man, and he really is an extraordinarily decent person caught up in the culture of corruption he did not create or profit from — but he didn’t walk away from,” Schectman said. 

“One wishes the sentence were more lenient, but I think anyone who was in that courtroom would come away thinking that Judge Dearie gave it extensive thought and deserves respect.” 

Follow @NinaPullano

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