As highlighted in this prior post , in late 2016 the DOJ and SEC brought a Foreign Corrupt Practices Act enforcement action against Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company with shares traded on the NYSE in which Odebrecht owned a majority of voting shares).
The conduct at issue was egregious and largely centered on a business unit, the Division of Structured Operations, housed within an Odebrecht subsidiary that allegedly served as little more than a bribe-paying department for the benefit of Odebrecht and Braskem. According to the resolution documents, former senior executives authorized approximately $788 million in bribes, largely through the Division of Structured Operations, to alleged foreign officials in at least twelve countries. While the principal focus of the DOJ’s action (and the exclusive focus of the SEC action) concerned conduct in Brazil including the companies relationships with Petrobras, the DOJ action also alleges improper payments in Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
Yesterday, in connection with the Brazil prong of the Odebrecht and Braskem enforcement action, the DOJ announced  that Jose Carlos Grubisich (pictured – a citizen of Brazil who served as the CEO and a member of the board of directors of Braskem, as well as in various capacities for Odebrecht) was charged with one count of conspiracy to violate the anti-bribery provision of the FCPA, one count of conspiracy to violate the books and records provision of the FCPA and to fail as a corporate officer to certify financial reports and one count of conspiracy to commit international money laundering.
This February 2019 indictment  alleges in pertinent part as follows:
“Between 2002 and 2014, Grubisich, together with others, agreed to make millions of dollars in corrupt payments to, and for the benefit of, government officials, political parties and others in Brazil to secure an improper advantage and to obtain and retain business for Braskem and Odebrecht. Specifically, during this period, Grubisich and his co-conspirators agreed to create the Caixa 2 slush fund, the proceeds of which were used by the Division of Structured Operations to make corrupt payments on Braskem’s behalf to Brazilian government officials and political parties. Grubisich approved bribe negotiations and bribe payments that were later made by the DSO to Foreign Official 1 [described as an executive and director of Petrobras], among others, including payments made to ensure that Braskem could retain a contract for a significant petrochemical project in Brazil, and to ensure that Braskem could obtain favorable pricing in contract negotiations with Petrobras.
Furthermore, while CEO of Braskem, Grubisich agreed with others to falsify Braskem’s books and records by falsely recording payment to offshore shell companies controlled by Braskem as ‘commissions.’ Despite this direct participation in the bribery scheme, Grubisich signed false certifications submitted to the SEC, which among other things, attested that Braskem’s annual reports fairly and accurately represented Braskem’s financial condition, and that Grubisich, as Braskem’s principal officer, had disclosed all fraudulent conduct by Braskem’s management and other employees with control over Braskem’s financial reporting.”
According to the indictment, certain financial transactions in furtherance of the bribery scheme were routed through correspondent bank accounts in New York or paid from bank accounts in New York or Florida.
In the DOJ’s release, Assistant Attorney General Brian Benczkowski stated:
“Grubisich and other senior executives at Braskem and Odebrecht allegedly engaged in a massive and sophisticated international bribery and money laundering scheme, employing secret slush funds, shell companies, and false accounting. As demonstrated by the charges unsealed today, the Department continues to work closely with our domestic and international partners to root out and prosecute corporate fraud and corruption at the highest levels.”
U.S. Attorney Richard Donoghue (E.D.N.Y.) stated:
“As alleged in the indictment, Jose Carlos Grubisich used his position as CEO of a major publicly traded petrochemical company to funnel hundreds of millions of dollars through offshore accounts to bribe power brokers and serve the interests of his company. Today’s indictment once again demonstrates the commitment of the U.S. Department of Justice to investigate and prosecute those who take advantage of the United States financial system to further their financial crimes.”
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