Odebrecht, Braskem Ordered To Pay A Record $3.5B For Kickback Scheme

Latin America’s biggest engineering firm, Odebrecht SA, and petrochemical company Braskem SA will pay at least $3.5 billion to resolve international charges related to kickbacks to the country’s state oil company and other organizations.

It’s the largest penalty to date for a foreign bribery case and is part of a settlement between U.S., Brazilian and Swiss agencies.

In U.S. federal court this week, the two firms pleaded guilty to conspiring to violate an American foreign bribery law. The case stemmed from an investigation connected to paying off Brazil’s Petrobras. The case was anchored in the U.S. as millions of dollars used in the bribes ran through the U.S. banking system, with some deals even planned stateside.

The court’s decision is the product of a three-year investigation – complete with dozens of arrests and political upset – known as “Operation Car Wash,” focused on unearthing corruption at Petrobras. The corruption has arguably caused Brazil to head into recession, and the investigations by U.S. and Swiss authorities are continuing.

The court charged both Odebrecht and Braskem with conspiring to violate the U.S. Foreign Corrupt Practices Act, which is intended to prevent companies from bribing international officials. U.S. Deputy Assistant Attorney General Suh said that the two companies used a hidden business unit to pay out hundreds of millions of dollars to governments on three different continents. Specifically, over the past 15 years, Odebrecht paid nearly $788 million in bribes related to 100 projects in 12 countries. Payments were disguised through shell companies and strategically left suitcases.

Most of the $3.5 billion is slated to go to the Brazilian authorities, with $2.6 billion coming from Odebrecht. Braskem will pay $957 million, with $632 million of that going to the U.S. Justice Department and the other $325 headed to the U.S. Securities and Exchange Commission.

The last time penalties for a multi-country corruption this high occurred was back in 2008, when $1.6 in billion bribery penalties were levied on Siemens AG.