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 | Investigations Dataset

Stanford Foreign Corrupt Practices Act Clearinghouse a Collaboration with Sullivan & Cromwell LLP

Investigations Dataset

 
Investigation into Eletrobras' Activities in Multiple Projects from 2008 to 2014 · Centrais Eletricas Brasileiras S.A.

Information & Summary

Investigation into Eletrobras' Activities in Multiple Projects from 2008 to 2014

Related FCPA Matter:   Eletrobras' Involvement in Multiple Projects Information

Information & Summary

Investigation Name:    Investigation into Eletrobras' Activities in Multiple Projects from 2008 to 2014

Trend:    Lava Jato

Type of investigation:    Internal, SEC, DOJ

Other Agencies Investigating/Assisting with SEC/DOJ Investigation:   

  • Brazilian Council for Economic Defense (Conselho Administrativo de Defesa Economica)
  • Brazilian Federal Police (Departamento de Policia Federal)
  • Brazilian Federal Prosecution Office (Ministerio Publico Federal)
  • Brazilian Securities Commission (Comissão de Valores Mobiliários)

Whistleblower:    Unknown

Summary

Centrais Eletricas Brasileiras S.A. (“Eletrobras”) was a Brazilian power generation, transmission and distribution company whose shares were registered with the SEC and traded on the New York Stock Exchange. The Brazilian government owned a 51% stake in Eletrobras and appointed a majority of Eletrobras’s board members.

In 2014, Brazilian authorities launched "Operation Lava Jato," an investigation into alleged corruption involving Brazilian contractors involved in the development of infrastructure projects in the Brazilian oil and gas sector.

Although at the time Eletrobras had no indication that it was being investigated, due to its operations in the Brazilian oil and gas sector, the company proactively began an internal inquiry in early 2015 into whether any misconduct occurred. Shortly after beginning this inquiry, the company learned that the CEO of an unrelated company had testified that he had made improper payments to the CEO of one of Eletrobras' subsidiaries. In response to these allegations, the company delayed the filing of its annual report and authorized the hiring of outside counsel to perform a more thorough investigation into whether the company had violated any Brazillian laws or the FCPA. Eletrobras later formed an independent committee to oversee the investigation.

As Eletrobras' internal investigation progressed, it expanded to include multiple subsidiaries and other "special purpose entities" in which Eletrobras owned minor stakes, as well as various individuals, including officers and directors at both Eletrobras and its subsidiaries.

The first phase of the company's internal investigation concluded in October 2016, and outside counsel uncovered multiple instances of bribery and bid-rigging. The internal investigation, however, appears to be ongoing.

Eletrobras has also disclosed that it signed tolling agreements with both the DOJ and SEC and is cooperating with both agencies.

On December 26, 2018, the SEC announced an enforcement action against Eletrobras.

In its 20-F filed on April 30, 2019, Eletrobras disclosed that the DOJ had alerted the company on August 13, 2018 that the agency had closed its investigation and would pursue no further action.

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