Odebrecht to Pay $2.6 Billion to Settle Bribery Claims
December 21 2016 - 8:31AM
Dow Jones News
By Samuel Rubenfeld
Construction giant Odebrecht SA will pay $2.6 billion to U.S.,
Brazilian and Swiss authorities to resolve a global investigation
into bribes paid across the world to secure business, according to
a person familiar with the matter.
The settlement pertains, in part, to the massive corruption
scheme centered on Brazilian state-controlled oil company Petróleo
Brasileiro SA, or Petrobras, in which executives of Petrobras
colluded with politicians and business executives to secure
contracts in exchange for bribes. The Brazilian investigation into
the Petrobras scandal, known as Operation Car Wash, has led to the
arrests of dozens of business executives, rattled the Brazilian
economy and rocked the country's politics.
Odebrecht was at the center of the scheme in Brazil, paying
officials hundreds of millions in bribes, but it also paid hundreds
of millions of dollars in bribes to officials elsewhere, the person
said.
"This is even larger than Siemens," the person said, referring
to the landmark $1.6 billion foreign-bribery settlement reached in
2008 between Siemens AG and U.S. and German authorities.
Under the terms of the agreement, according to the person,
Odebrecht will agree to plead guilty in U.S. federal court, and it
will secure settlements with both Brazilian and Swiss
authorities.
The privately held company received a reduced settlement because
of an inability to pay the full penalty and due to some cooperation
credit, the person said. Odebrecht's credit was badly damaged as
the scandal spread. Moody's upgraded its ratings outlook on
Odebrecht on Dec. 5, ahead of the expected settlement, saying an
agreement, once secured, "finally removes a long-term uncertainty
for its financial and operating performance."
The U.S., Brazilian and Swiss governments will split the $2.6
billion, the person said, and Odebrecht will be required to retain
a compliance monitor for three years.
In addition, a separate agreement will be reached with Braskem
SA, a Brazilian chemical company controlled by Petrobras and
Odebrecht.
Braskem last week agreed to pay $957 million to resolve the
investigation in Brazil; the agreement reached Wednesday will be
with the U.S. and Switzerland, the person said.
A U.S. Justice Department spokesman declined to comment.
Brazilian authorities have previously declined to comment, and a
spokesman for the Swiss Office of the Attorney General said the
office "might with a certain possibility communicate" later
Wednesday. Odebrecht and Braskem representatives didn't respond to
requests for comment.
Earlier this month, Odebrecht apologized for its mistakes in a
statement, and acknowledged "its participation in illicit actions"
as part of its business.
"Odebrecht has learned from these mistakes and is evolving," the
statement said.
No individuals are part of the agreement to be struck Wednesday,
the person said. But 77 Odebrecht executives started signing plea
agreements this month, a person close to the negotiations has said.
One of them was Marcelo Odebrecht, the jailed former chief
executive, who was sentenced earlier this year to 19 years in
prison for corruption, money laundering and conspiracy.
Write to Samuel Rubenfeld at samuel.rubenfeld@wsj.com
(END) Dow Jones Newswires
December 21, 2016 08:16 ET (13:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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