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 | Investigations Dataset

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

Investigations Dataset

 
Investigation into Gerdau's Activities in Brazil · Gerdau S.A.

Information & Summary

Investigation into Gerdau's Activities in Brazil

Related FCPA Matter:   Gerdau's Involvement in Brazil Information

Information & Summary

Investigation Name:    Investigation into Gerdau's Activities in Brazil

Trend:    None

Type of investigation:    Internal, SEC

Other Agencies Investigating/Assisting with SEC Investigation:   

  • Brazilian Federal Police (Departamento de Policia Federal)
  • Brazilian Securities and Exchange Commision (CVM)

Whistleblower:    Unknown

Summary

Gerdau S.A., a Brazilian steel company, traded its American Depositary Shares on the NYSE.

In in 6-K filed on May 6, 2015, Gerdau disclosed that it had received an official letter from the Brazilian Securities and Exchange Commission on April 6, 2015, seeking clarification regarding news reports linking Gerdau to a broader investigation initiated by the Brazilian Federal Police into the attempted influencing of decisions by the Administrative Board of Tax Appeals ("CARF") through illegal means. This investigation by the Brazilian Federal Police was called Operation Zelotes. Prior to the April letter from the Brazilian SEC, the company said that it had not been contacted by any public authority concerning the Operation.

Sometime after receiving the letter, Gerdau's board of directors decided to engage outside counsel to begin an interal investigation into any possible misconduct with CARF.

The company reported in a 6-K filed on November 7, 2018 that the U.S. SEC had begun requesting information from the company in connection with the alleged misconduct being investigated in Operation Zelotes. The company also disclosed that the company's internal investigation had concluded.

Though the company's public disclosures regarding this investigation did not explicitly cite FCPA concerns, further research into media reports about Operation Zelotes appears to indicate that the Brazilian investigation includes possible improper payments to the CARF officials.

In its 20-F filed on March 29, 2019, Gerdau disclosed that the SEC had closed its inquiry into the company.

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