Odebrecht and Braskem guilty pleas and settlements (2016)

The pleas

DOJ announced on 21 December 2016 that Odebrecht S.A., a Brazilian construction group, and Braskem S.A., a Brazilian petrochemical company, had pleaded guilty that day ¹. Each pleaded to one count of conspiracy to violate the anti-bribery provisions of the FCPA ¹. The pleas were entered before U.S. District Judge Raymond J. Dearie in the Eastern District of New York ¹.

DOJ called it the "largest foreign bribery case in history" in the release title ¹. The resolutions were coordinated with authorities in Brazil and Switzerland ¹. Braskem reached a separate civil settlement with the SEC on the same day ².

Odebrecht: the amount and the ability-to-pay analysis

DOJ said Odebrecht agreed to a criminal fine of US$4.5 billion, subject to an analysis of its ability to pay, due to be completed by 31 March 2017 ¹. Odebrecht said it could pay about US$2.6 billion ¹. The US and Switzerland were each to receive 10% of the principal criminal fine and Brazil 80%, with the US crediting amounts paid to Brazil and Switzerland ¹.

In a sentencing memorandum filed on 11 April 2017 in case 16-CR-643 (RJD), DOJ said the plea agreement set a total penalty of US$4,503,600,000 ³. DOJ told the court the analysis showed "the Company has an inability to pay a total criminal penalty in excess of $2,600,000,000" ³. It said Odebrecht "will pay, $93 million to the United States before June 30, 2017" ³. The memo says the US had expected about US$117 million when the plea agreement was signed ³.

DOJ said Odebrecht received a 25% reduction off the bottom of the U.S. Sentencing Guidelines range for full cooperation ¹.

Braskem: criminal and SEC terms

DOJ said Braskem agreed to a criminal penalty of US$632 million ¹. Brazil was to receive 70%, Switzerland 15% and the US 15%, or US$94.8 million ¹. DOJ said Braskem received a 15% reduction for partial cooperation ¹.

The SEC said Braskem agreed to pay US$325 million in disgorgement, of which US$65 million goes to the SEC and US$260 million to Brazilian authorities ². The SEC said the global settlement totalled US$957 million ². The SEC release says Braskem must retain an independent corporate monitor for at least three years ². The SEC release reviewed for this page does not state whether Braskem admitted or denied the SEC's allegations ².

The conduct described by DOJ

DOJ said that, "according to its admissions," Odebrecht ran a bribery and bid-rigging scheme for more than a decade, beginning as early as 2001 ¹. DOJ put Odebrecht's bribes at about US$788 million and its corrupt payments and/or profits at about US$3.336 billion ¹.

DOJ said Braskem paid about US$250 million into Odebrecht's bribe system from 2006 to 2014 ¹. DOJ said the money was used to pay Brazilian politicians, political parties and a Petrobras official ¹. DOJ put Braskem's corrupt payments and/or profits at about US$465 million ¹.

Deputy Assistant Attorney General Sung-Hee Suh said "Such brazen wrongdoing calls for a strong response from law enforcement" ¹.

Status

Both companies agreed to adopt compliance procedures, retain independent compliance monitors for three years and keep cooperating, including in cases against individuals ¹. DOJ said Odebrecht's sentencing was scheduled for 17 April 2017 and Braskem's had not been set ¹. The DOJ memo refers to a sentencing hearing on 17 April 2017 ³. This page has not confirmed the sentence imposed or the end of either monitorship from a court record or agency release, so it does not report them.