Enforcement Action

 

Docket or Case Number:    16-cr-643

Court:    E.D. New York

Initiation Date:    12/16/2016  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Robert L. Capers, United States Attorney
  • Andrew Weissman, Chief, Fraud Section, Criminal Division
  • Alixandra Smith, Assistant United States Attorney
  • Julia Nestor, Assistant United States Attorney
  • Christopher Cestaro, Trial Attorney, Fraud Section, Criminal Division
  • David Last, Trial Attorney, Fraud Section, Criminal Division
  • David M. Fuhr, Trial Attorney, Fraud Section, Criminal Division
  • Lorinda Laryea, Trial Attorney, Fraud Section, Criminal Division
  • Kevin R. Gingras, Trial Attorney, Fraud Section, Criminal Division

Assisting Agencies:    U.S. Securities and Exchange Commission , Federal Bureau of Investigation , Department of Justice- Criminal Division’s Office of International Affairs , Switzerland Attorney General's Office , Brazil's Federal Police , Federal Prosecution Service (MPF)

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Odebrecht S.A. was a Brazilian conglomerate that conducted business in a variety of industries.

From 2001 to 2016, Odebrecht engaged in a scheme with others to make improper payments to government officials in Angola, Argentina, Brazil, Colombia, the Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela. The company paid the bribes in connection with over 100 projects in those twelve countries. To facilitate this scheme, Odebrecht established a standalone division within the company called the Division of Structured Operations that, according to the Information filed by the DOJ "effectively functioned as a bribe department with Odebrecht and its related entities." In all, Odebrecht paid approximately $788 million in bribes and made $3.336 billion in profits on the contracts obtained by those bribes in the 15 year period.

On December 16, 2017, the DOJ filed a single count information against Odebrecht in the Eastern District of New York alleging conspiracy to violate the anti-bribery provisions of the FCPA. On December 21, the company entered into a plea agreement with the DOJ. Under the terms of the agreement, Odebrecht plead guilty to the conspiracy charge, agreed to pay a criminal fine of $2.6 billion, and agreed to appoint an independent compliance monitor for a term of three years. The $2.6 billion fine was to be divvied up by the United States, Brazil, and Switzerland. Assuming full payment of the the fine to Brazil and Switzerland, the share that Odebrecht is scheduled to pay to the United States is 10% of the total fine, or $260 million, plus any interest accrued before payment, which is due in June 2017. This fine represents a significant departure from the minimum guidelines range for the offense. The DOJ agreed that a 25% downward departure from the minimum fine under the sentencing guidelines was appropriate given the company's cooperation and remediation, but even that amount, $4.5 billion, was more than the company could afford. Due to inability to pay the full fine, the DOJ agreed to allow the company to pay only $2.6 billion. Subsequent negotiations between the company and the enforcement authorities resulted in a further diminution of the fine. In the sentencing memorandum filed by the government on April 11, 2017, the DOJ reduced the fine that Odebrecht must pay to the United States to $93 million due to the company's inability to pay the full fine.

In a related proceeding, Braskem S.A., a company controlled and partially owned by Odebrecht, entered into a plea agreement with the DOJ on December 21, 2016. Under the terms of the agreement, Braskem agreed to plead guilty to the conspiracy charge, pay a criminal penalty of $632,625,336.81 plus disgorgement of $325 million, strengthen its anti-corruption compliance policies and procedures, and hire an independent compliance monitor for a term of three years. The DOJ agreed to that the criminal penalty imposed represented a 15% downward departure from the minimum guidelines range based on the company's remediation and partial cooperation. Of the total criminal penalty imposed, Brakem will pay 15%, or $94,893,800.52, to the United States, 15% to Switzerland, and 70% to Brazil. The DOJ deemed that the disgorgement imposed in this proceeding would be satisfied by payment of $325 million in disgorgement in the parallel SEC proceeding.

In a related proceeding Braskem entered into a consent agreement with the SEC on December 21, 2016. Under the terms of that agreement, Braskem was permanently enjoined from future violations of the FCPA, agreed to pay $325 million in disgorgement, and hire an independent compliance monitor for a term of three years. Payment of the $325 million disgorgement will be split between the United States and Brazil, with the United States receiving $65 million share contigent upon payment of the remainder to Brazil (if the company fails to pay the Brazilian share, the full amount will be due to the United States).

Country(ies) involved:    Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela

Sanction to Bribe Ratio:    $93,000,400 / $788,000,000 = 11.80 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $93,000,400 / $3,336,000,000 = 2.79 %

Number of Related Enforcement Actions (Including This Enforcement Action):    3

Country(ies) involved:    Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela

Total $ Bribery Payments:    $788,000,000

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $3,336,000,000

Total $ Monetary Sanctions:    $252,894,601

Sanction to Bribe Ratio:    $252,894,601 / $788,000,000 = (32.09 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $252,894,601 / $3,336,000,000 = (7.58 %)

Name:    Odebrecht S.A.

Place of Incorporation:    Brazil

HQ Country(ies):    Brazil

Entity Type:    Private Company

FCPA Claims:    Anti-Bribery, Conspiracy (18 U.S.C. 371)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Foreign Nationals and Entities ; Conspirator

Period of Bribery:   2001 - 2016

Total Bribery Payments:    $788,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $3,336,000,000

Country(ies) involved:    Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Officials; Argentine government
  • Name N/A, Officials; Peruvian government
  • Name N/A, Officials; Colombian government
  • Name N/A, Officials; Venezuelan government
  • Name N/A, Officials; Dominican government
  • Name N/A, Officials; Ecuadoran government
  • Name N/A, Officials; Guatemalan government
  • Name N/A, Officials; Mexican government
  • Name N/A, Officials; Mozambiquan government
  • Name N/A, Officials; Angolan government
  • Name N/A, Officials; Panamanian government
  • Brazilian Official 1; Executive and Director; Petroleo Brasileiro S.A. ("Petrobras")
  • Brazilian Official 2; Executive and Director; Petroleo Brasileiro S.A. ("Petrobras")
  • Brazilian Official 3; Manager; Petroleo Brasileiro S.A. ("Petrobras")
  • Brazilian Official 4; High-Level State Elected Official; Brazilian government
  • Brazilian Official 5; High-Level Legislative Official; Brazilian government

Defendant-Related Entities Involved in the Misconduct:    N/A

Third-Party Intermediary:   

  • Unnamed intermediaries , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available, Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Brazil

Period of Bribery:   2003 – 2016

Total Bribery Payments:    $349,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $1,900,000,000

Country(ies) involved:    Brazil

Officials Potentially Influenced (Name; Title; Organization):  

  • Brazilian Official 1; Executive and Director; Petroleo Brasileiro S.A. ("Petrobras");
  • Brazilian Official 2; Executive and Director; Petroleo Brasileiro S.A. ("Petrobras");
  • Brazilian Official 3; Manager; Petroleo Brasileiro S.A. ("Petrobras");
  • Brazilian Official 4; High-Level State Elected Official; Brazilian government;
  • Brazilian Official 5; High-Level Legislative Official; Brazilian government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Angola

Period of Bribery:   2006 – 2013

Total Bribery Payments:    $50,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $261,700,000

Country(ies) involved:    Angola

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Angolan government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Argentina

Period of Bribery:   2007 – 2014

Total Bribery Payments:    $35,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $278,000,000

Country(ies) involved:    Argentina

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Argentine government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Unnamed intermediaries - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Colombia

Period of Bribery:   2009 – 2014

Total Bribery Payments:    $11,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $50,000,000

Country(ies) involved:    Colombia

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Colombian government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in the Dominican Republic

Period of Bribery:   2001 – 2014

Total Bribery Payments:    $92,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $163,000,000

Country(ies) involved:    Dominican Republic

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Dominican government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Unnamed intermediaries - Agent/Consultant/Broker

Type of Bribe:   N/A

Cash, Wire or Check:    N/A

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Ecuador

Period of Bribery:   2007 – 2016

Total Bribery Payments:    $33,500,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $116,000,000

Country(ies) involved:    Ecuador

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Ecuadoran government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Guatemala

Period of Bribery:   2013 – 2015

Total Bribery Payments:    $18,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $34,000,000

Country(ies) involved:    Guatemala

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Guatemalan government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Mexico

Period of Bribery:   2010 – 2014

Total Bribery Payments:    $10,500,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $39,000,000

Country(ies) involved:    Mexico

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Mexican government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Mozambique

Period of Bribery:   2011 – 2014

Total Bribery Payments:    $900,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Mozambique

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Mozambiquan government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Panama

Period of Bribery:   2010 – 2014

Total Bribery Payments:    $59,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $175,000,000

Country(ies) involved:    Panama

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Panamanian government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Peru

Period of Bribery:   2005 – 2014

Total Bribery Payments:    $29,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $143,000,000

Country(ies) involved:    Peru

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Peruvian government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Unnamed intermediaries - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Venezuela

Period of Bribery:   2006 – 2015

Total Bribery Payments:    $98,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Venezuela

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Venezuelan government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Unnamed intermediaries - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Odebrecht S.A.

Subsidiary:  Braskem S.A.

  • Percentage of Ownership:    38.00 %
  • Direct or Indirect Ownership:    Indirect
  • Parent Had Knowledge of Sub’s Bribery?:    Yes
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

Re: Odebrecht S.A.

  • Inadequate anti-corruption compliance policies, procedures, or program
  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Odebrecht S.A.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Odebrecht S.A.    

Total Monetary Sanctions for the Action:    $93,000,400

Case Status:    Resolved


Disposition:    Plea Agreement

Date of Disposition:    12/21/2016

Odebrecht S.A.

—  Total Monetary Sanctions for Defendant:    $93,000,400

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Independent monitor

—  Admission of Guilt/Acceptance of Responsibility:    Yes

No Document Title Date Category