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Brazilian companies Odebrecht and Braskem to pay up to $4.5B over Petrobras bribes

By
Andrew V. Pestano
Brazilian construction firm Odebrecht has agreed to pay a fine between $2.6 billion and $4.5 billion after pleading guilty to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act, the U.S. Department of Justice said on Wednesday. Braskem, which participated in Odebrecht's bribery scheme, will face a financial penalty nearing $1 billion. Photo courtesy of Odebrecht
Brazilian construction firm Odebrecht has agreed to pay a fine between $2.6 billion and $4.5 billion after pleading guilty to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act, the U.S. Department of Justice said on Wednesday. Braskem, which participated in Odebrecht's bribery scheme, will face a financial penalty nearing $1 billion. Photo courtesy of Odebrecht

WASHINGTON, Dec. 21 (UPI) -- The U.S Department of Justice on Wednesday said Brazilian companies Odebrecht and Braskem will pay at least $3.5 billion in fines after pleading guilty to a massive bribery case.

Odebrecht, which will pay at least $2.6 billion in criminal penalties, and Braskem, which will pay about $636 million in criminal penalties and will relinquish $325 in profits, were accused of participating in schemes that bribed government officials worldwide. The financial penalties will be distributed between Brazilian, Swiss and U.S. authorities.

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"Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit -- a 'Department of Bribery,' so to speak -- that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents," Deputy Assistant Attorney General Sung-Hee Suh of the Justice Department's Criminal Division said in a statement. "Such brazen wrongdoing calls for a strong response from law enforcement, and through a strong effort with our colleagues in Brazil and Switzerland, we have seen just that. I hope that today's action will serve as a model for future efforts."

Odebrecht pleaded guilty to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act. Odebrecht agreed to pay a $4.5 billion criminal penalty, but it said it can only pay $2.6 billion. Authorities will determine the final criminal penalty Odebrecht will pay after further review, as it could be up to $4.5 billion. Sentencing is scheduled for April 17.

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Braskem also pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA. Sentencing is not yet scheduled.

Dozens of Brazilian business leaders and politicians have been indicted for corruption, money laundering and racketeering over the bribery scandal related to Petrobras, a semi-public oil and gas company.

"According to its admissions, Odebrecht engaged in a massive and unparalleled bribery and bid-rigging scheme for more than a decade, beginning as early as 2001. During that time, Odebrecht paid approximately $788 million in bribes to government officials, their representatives and political parties in a number of countries in order to win business in those countries" the Justice Department said. "The criminal conduct was directed by the highest levels of the company, with the bribes paid through a complex network of shell companies, off-book transactions and off-shore bank accounts."

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Braskem admitted to paying about $250 million "into Odebrecht's secret, off-book bribe payment system" in order to receive benefits such as preferential rates from Petrobras for raw materials, construction contracts and favorable legislation and government programs that reduced the company's tax liabilities.

"With a combined total of at least $3.5 billion, today's resolutions with Odebrecht and Braskem are the largest-ever global foreign bribery resolution," the Justice Department added.

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