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United States v. Odebrecht S.A.

 
:
Odebrecht S.A.
:
DOJ Criminal
:
December 21, 2016
:
United States v. Odebrecht S.A.
:
United States v. Odebrecht S.A., No. 16-cr-00643 (E.D.N.Y. 2016)
:
The DOJ's and SEC's enforcement action against Odebrecht is the largest FCPA penalty to date.
:
Conglomerate/Diversified Holding Company
:
Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela
:
2001; 2002; 2003; 2004; 2005; 2006; 2007; 2008; 2009; 2010; 2011; 2012; 2013; 2014; 2015; 2016
:
Multiple unnamed officials from Brazil’s state-owned oil company, Petróleo Brasileiro S.A. (“Petrobras”); Multiple unnamed Brazilian government officials; Unnamed government officials in Angola, Argentina, Colombia, Dominican Republic, Ecuador; Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
:
Odebrecht S.A., is a Brazilian private holding company that operates in twenty-seven countries in various sectors, including engineering, oil and gas, and real estate development.

According to the DOJ, between 2001 and 2016, Odebrecht coordinated a bribery scheme to make approximately $788 million in improper payments to foreign officials in at least twelve countries to obtain or retain business. Specifically, Odebrecht allegedly sought to influence foreign officials through the payment of bribes, primarily to secure public works contracts or other contracts with state-owned enterprises. To facilitate these payments, the DOJ claims that Odebrecht generated unrecorded funds through off-book transactions involving overhead payments from subsidiaries, overcharges to service providers not included in project budgets, undeclared retainers, and self-insurance transactions. Odebrecht then allegedly sent the unrecorded funds to an “elaborate, secret financial structure.” According to the DOJ, the structure eventually developed into a separate entity, known as the Division of Structure Operations, with its own clandestine communication system. The Division of Structure Operations would allegedly receive the off-book funds from Odebrecht and organize their delivery to the designated officials, sometimes utilizing numerous offshore entities and bank accounts to disguise the operation.

On December 21, 2016, the DOJ announced that Odebrecht had pleaded guilty to one-count of conspiracy to violate the FCPA’s anti-bribery provision. In its plea, Odebrecht agreed to pay criminal penalties of up to $4.5 billion, however, it represented that it was only able to pay a penalty of $2.6 billion. The total penalty paid by Odebrecht was divided between the U.S., Brazilian, and Swiss authorities, with the U.S. and Switzerland receiving 10% each and Brazil receiving the remaining 80%. U.S. and Brazilian authorities planned to conduct an independent analysis to verify whether Odebrecht is only able to pay a $2.6 billion criminal penalty and will complete the investigation by March 31, 2017.

Braskem S.A., and Odebrecht subsidiary, separately pleaded guilty to one count of conspiracy to violate the FCPA’s anti-bribery provision. According to the plea agreement, Braskem agreed to pay a total criminal penalty of approximately $632 million. Of the total criminal penalty against Braskem, the U.S, Swiss, and Brazilian authorities would each receive approximately $94.9 million, $94.9 million, and $442.8 million, respectively. Braskem was also charged by the SEC for violations of the FCPA’s anti-bribery, books-and-records, and internal controls provisions. According to its resolution with the SEC, Braskem agreed to disgorge a total of $325 million to U.S. and Brazilian authorities.
:
Conspiracy - Anti-Bribery
:
Plea
:
Odebrecht agreed to pay a $2.6 billion criminal penalty.
:
2,600,000,000
:
0
:
Other Person
:
Foreign
:
Brazil
:
Contract Procurement/Retention, Legislation, Other Business Advantage
:
788,000,000
:
Cash, Wire/check
:
Shell entity, Subsidiary Company
:
3,336,000,000
:
Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela
:
No
:
No