A U.S. federal judge this week ordered Odebrecht to pay $2.6 billion in fines for violations of the Foreign Corrupt Practices Act, securing a plea deal reached last year with authorities in the United States, Brazil, and Switzerland.
On April 17, U.S. District Court Judge for the Eastern District of New York Raymond Dearie sentenced Odebrecht to pay $2.39 billion to the government of Brazil; $93 million to the U.S. Department of Treasury; and $116 million to the Switzerland government.
In December 2016, Odebrecht pleaded guilty to a one-count criminal information by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office in the U.S. District Court for the Eastern District of New York, charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.
The Odebrecht judgment, published April 11, details the scope of the bribery scheme: “Executives and officers at the highest levels of Odebrecht were knowledgeable of and participated in the corrupt scheme,” court documents state. Between 2011 and 2016, Odebrecht and its co-conspirators “paid approximately $788 million in bribes in association with more than 100 projects in twelve countries.”
These countries include Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru and Venezuela. “Odebrecht, together with its co-conspirators, received approximately $3.336 billion in ill-gotten benefits,” court documents state.
As part of the scheme, Odebrecht and its co-conspirators created and funded an elaborate, secret financial structure within the company, a “Division of Structured Operations,” that operated with the sole purpose to account for and disburse bribe payments to foreign government officials and political parties.
To conceal its activities, the Division of Structured Operations used a separate and off-book communications system, which Odebrecht and its co-conspirators used to communicate with one another about the bribes via secure e-mails and instant messages, using codenames and passwords, the Justice Department stated.
As part of the settlement, Odebrecht agreed to adopt enhanced compliance procedures and to retain independent compliance monitors for three years. At the time of the filing, the parties had selected a monitor, who had already commenced work pursuant to the plea agreement, court documents stated.
The court documents revealed further details on the remedial measures Odebrecht has taken to enhance its compliance department, including:
Increasing by 50 percent the number of employees dedicated to compliance;
More than doubling resources devoted to compliance in 2016 and more than tripling the budget for 2017;
Creating a chief compliance officer position that reports directly to the audit committee;
Adopting heightened controls and anti-corruption compliance protocols, including hospitality and gift approval procedures
Terminating 51 individuals who participated in the misconduct;
Disciplining an additional 26 individuals who engaged in the misconduct, including suspensions of up to a year and a half, significant financial penalties, and demotion to non-managerial, non-supervisory, non-decision making roles, for each of the 26 individuals;
Requiring individualized anti-corruption compliance and business ethics training for each of the 26 individuals, and requiring each to be subject to heightened oversight and day-to-day supervision, including ensuring that the independent compliance monitor has full access and authority to evaluate the business activities and ongoing compliance of those individuals; and
Incorporating adherence to compliance principles into employee performance evaluation and compensation;
The criminal penalty for Odebrecht reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range, because of Odebrecht’s full cooperation with the government’s investigation.
No comments yet