Brazilian construction group Odebrecht adopted corruption as a “business model,” according to superstar judge Sergio Moro, who is heading the wide-ranging Carwash corruption investigation in the country. For a long time, the results were so good that the group apparently decided to export the model around the world—investing billions of dollars in the process. But as it did, it failed to recognize just how much it would provide a catalyst for law enforcement agencies to work across borders and to spur a global answer to global corruption problems. Odebrecht might be one of the great compliance failures of our time but, ironically, it might also help create much-improved compliance, anti-corruption, and law enforcement efforts in its wake.
As a result of plea bargain deals signed by the company and dozens of its executives with Brazilian, U.S., and Swiss authorities, the extraordinary extent of Odebrecht’s international bribery payments is coming to light. Executives have told investigators that Odebrecht paid as much as $3.39 billion in bribes, in Brazil and abroad, between 2006 and 2014. The sophistication of the company’s bribery scheme was such that a dedicated unit, which received the very technocratic name of Department of Structured Operations, was created to guarantee the efficiency of payments. The unit bought a bank in Antigua to channel the bribery money and to fuel money into the system, and artificial accounting losses were created by derivative transactions and by the misrepresentation of revenues in projects developed in countries with loose banking supervision. If the system had a hint of financial mastery about it, that was possibly not a surprise. Marcelo Odebrecht, the president of the group who allegedly controlled the bribery scheme, has an MBA from a Swiss business school and used to be a young star at the World Economic Forum in Davos, an organization that likes to promote business innovation.
