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Enforcement Action Dataset

 

Initiation Date:    09/27/2018  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Christopher J. Cestaro, Assistant Chief, Fraud Section, Criminal Division
  • Lorinda Laryea, Assistant Chief, Fraud Section, Criminal Division
  • Derek J. Ettinger, Trial Attorney, Fraud Section, Criminal Division
  • Sandra L. Moser, Acting Chief, Fraud Section, Criminal Division
  • G. Zachary Terwilliger, United States Attorney
  • Grace L. Hill, Assistant United States Attorney

Assisting Agencies:    U.S. Securities and Exchange Commission , Federal Bureau of Investigation , Brazilian Law Enforcement Agency

Type of Action:    DOJ Criminal Proceeding

Docket or Case Number:    N/A

Court:    N/A

Origin of the Proceeding:    Unknown

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Petroleo Brasileiro S.A. - Petrobras was a Brazilian state-owned-and-controlled oil and gas company that operated in 18 other countries, including the United States. The Brazilian government directly owed approximately 50.26% of Petrobras's common shares, and the Brazilian Economic and Social Development Bank controlled an additional 9.87% of its common shares. Petrobras's common and preferred stock was registered with the SEC and traded on the New York Stock Exchange.

According to the documents in this case, from about 2004 and 2012, Petrobras executives and managers, as well as contractors and suppliers of the Company, engaged in a massive bid-rigging and bribery schemes that, among other things, allowed contractors to obtain contracts from Petrobras and maintained the favor of Brazilian politicians and political parties. Typically, the contractors paid bribes of a small percentage of the value of the contracts obtained from Petrobras, which were then split among certain executives, politicians, political parties, and other individuals who helped facilitate the bribes payments. While potentially more than $2 billion was generated and used to make corrupt payments as part of this scheme, only about $1 billion were directed to politicians and political parties. The payments and inflated contracts were recorded in Petrobras' books and records as legitimate expenses and assets.

On September 27, 2018, the DOJ announced that it had reached a non-prosecution agreement with Petrobras. The non-prosecution agreement was part of a global settlement between the company and U.S. and Brazilian authorities. As part of the non-prosecution agreement, Petrobras agreed to pay a total criminal fine of $853,200,000, with $85,320,000 (10%) to the DOJ, $85,320,000 (10%) to the SEC, and the remaining $682,560,000 (80%) paid to Brazilian authorities. Petrobras also agreed to self-report to the DOJ on the status of its anti-corruption compliance for a term of three years. In agreeing to a non-prosecution agreement with the company, the DOJ cited Petrobras' cooperation and remedial measures, which the DOJ further cited as the reasons for the 25% downward departure below the minimum monetary penalty under the U.S. sentencing guidelines.

In a related settled administrative action brought on September 27, 2018, the SEC entered a cease and desist order against the company. Under the terms of the settlement, the SEC ordered Petrobras to cease and desist violations of the books & records and internal controls provisions of the FCPA and to pay disgorgement of $711,000,000 plus prejudgment interest of $222,473,797 as well as a civil fine of $853,200,000. However, under the terms of the agreement, the entirety of the disgorgement and prejudgment interest was deemed satisfied by the payment of restitution in a parallel securities class action proceeding, and all but $85,320,000 of the fine was deemed satisfied by the payment of $85,320,000 to the DOJ and $682,560,000 to the Brazilian authorities.

Country(ies) involved:    Brazil

Region(s) involved:    Latin America

Sanction to Bribe Ratio:    $170,640,000 / $1,000,000,000 = 8.53 %

Sanction to Revenue Ratio:    Not Applicable

Sanction to Profit Ratio:    Not Applicable

FCPA Matter Name:   Petroleo Brasileiro S.A. - Petrobras' Involvement in Brazil between 2003 and 2012 Information

Number of Related Enforcement Actions (Including This Enforcement Action):    2

Country(ies) involved:    Brazil

Region(s) involved:    Latin America

Total $ Bribery Payments:    $1,000,000,000

Total $ Revenue Generated from Bribery:    Unknown

Total $ Profit Earned or Expenses Avoided from Bribery:    Unknown

Total $ Monetary Sanctions (U.S. Sanctions Only):    $1,104,113,797

Sanction to Bribe Ratio:    $1,104,113,797 / $1,000,000,000 = (110.41 %)

Sanction to Revenue Ratio:    Not Applicable

Sanction to Profit Ratio:    Not Applicable

Name:    Petroleo Brasileiro S.A. - Petrobras

Entity Type:    Public Company

Place of Incorporation:    Brazil

HQ Country(ies):    Brazil

Industry:    Oil & Gas

FCPA Claims:    Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1) ; Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    None

Statutory Basis for FCPA Jurisdiction:    Issuer

Period of Bribery:   2004 - 2012

Total Bribery Payments:    $1,000,000,000

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    Unknown

Country(ies) involved:    Brazil

Region(s) involved:    Latin America

Officials Potentially Influenced (Name; Title; Organization): 

  • Name Unknown, Politicians; Brazilian government
  • Name Unknown, Political parties; Brazilian government

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    None/Unknown

Third-Party Intermediary:   

  • Unnamed individuals , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Brazil

Period of Bribery:   2004 – 2012

Total Bribery Payments:    $1,000,000,000

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    Unknown

Country(ies) involved:    Brazil

Region(s) involved:    Latin America

Officials Potentially Influenced (Name; Title; Organization):  

  • Name Unknown, Politicians; Brazilian government;
  • Name Unknown, Political parties; Brazilian government;

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    None/Unknown

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

Type of Bribe:   Money

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  No

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

Re: Petroleo Brasileiro S.A. - Petrobras

  • 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
Petroleo Brasileiro S.A. - Petrobras    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Petroleo Brasileiro S.A. - Petrobras    

Total Monetary Sanctions for the Action:    $170,640,000

Case Status:    Resolved


Disposition:    Non-Prosecution Agreement

Date of Disposition:    09/27/2018

Petroleo Brasileiro S.A. - Petrobras

—  Total Monetary Sanctions for Defendant:    $170,640,000

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Self-reporting

—  Admission of Guilt/Acceptance of Responsibility:    Yes

    Note: This sanction may have been imposed jointly and severally on multiple defendants, or it may resolve claims against more than one defendant in this proceeding or related proceedings. You should review the case summaries and resolution documents for all related cases to better understand how sanctions were levied against the defendants.

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