Record bribery ruling takes Odebrecht fines to $3.5bn
Latin America’s biggest construction company pleads guilty in Petrobras scandal
Brazilian conglomerate Odebrecht and its petrochemicals unit Braskem on Wednesday pleaded guilty to violating US anti-bribery laws during the Petrobras scandal and agreed to pay fines totalling at least $3.5bn.
The wide-ranging Petrobras scandal has ravaged investment in the Brazilian oil industry and other infrastructure at a time when the country is suffering its worst recession in more than a century.
The Odebrecht fines are expected be the biggest ever under the US Foreign Corrupt Practices Act, eclipsing the previous record of $800m of penalties imposed on Siemens, the German conglomerate, in 2008.
While Odebrecht and Braskem pleaded guilty in a New York court on Wednesday to breaching US anti-bribery laws, the final amount of the parent company’s fine is not due to be finalised until April.
But the Odebrecht conglomerate is expected to pay at least $2.6bn in a settlement with Brazilian, Swiss and US authorities, lawyers said. Braskem this month agreed to pay $957m.
Odebrecht, Latin America’s largest construction company, was one of a group of contractors alleged to have conspired with Brazilian politicians and former Petrobras executives over billions of dollars of bribes and kickbacks at the state-controlled oil company.
The US Department of Justice highlighted alleged wrongdoing by Odebrecht in the Petrobras scandal but also in securing contracts elsewhere in the world.
Sung-Hee Suh, deputy assistant attorney-general at the DoJ’s criminal division, said Odebrecht and Braskem had “systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents”.
“Such brazen wrongdoing calls for a strong response from law enforcement,” she added.
“Odebrecht has co-operated fully and will continue to do so,” said William Burck of Quinn Emanuel Urquhart & Sullivan, Odebrecht’s lawyer. “The company is glad to be turning the page and focusing on its future.”
Marcelo Odebrecht, Odebrecht’s former chief executive and once one of the most respected business figures in Brazil, was jailed for 19 years in March for his role in the Petrobras affair.
Prosecutors accused him of operating a secret department at Odebrecht through which he paid bribes to the country’s politicians and public servants.
The construction arm of Odebrecht, a large multinational conglomerate which employs about 130,000 people, has seen its order book shrink by about a third in two years as a result of the scandal, analysts said.
Under its guilty plea, Braskem agreed to pay $325m of its total fines in the form of a “disgorgement”: $65m to the US Securities and Exchange Commission and the remainder to Brazilian authorities.
While Odebrecht is not listed on a stock market, Braskem has American Depositary Receipts and is subject to SEC rules.
“As alleged in our complaint, Braskem lacked the internal controls to prevent its use of third parties, off-book accounts, and other intermediaries to bribe government officials in Brazil during an eight-year period,” said Stephanie Avakian, deputy director at the SEC enforcement division.
About 80 per cent of the fine paid by the Odebrecht conglomerate is expected to go to Brazil, with the remainder split equally between the US and Switzerland.
No comments:
Post a Comment