Dive Brief:
- In what The Wall Street Journal characterized as the "largest anticorruption settlement in history," Brazilian construction behemoth Odebrecht has agreed to pay up to $4.5 billion to resolve bribery and other corruption charges.
- Prosecutors said Odebrecht and other construction firms overbilled state oil company Petrobras and bribed politicians and Petrobras executives to get away with their scheme.
- As part of the government prosecution, an operation known as "Car Wash," a group of Odebrecht executives pleaded guilty, and the company is barred from performing any publicly funded projects for two years.
Dive Insight:
In total, authorities said that Odebrecht paid almost $800 million in bribes — over a period of 15 years — to officials in 12 countries, for which the company ultimately received $3.34 billion. Odebrecht CEO Marcelo Odebrecht, grandson of the company's founder, was sentenced to serve 19 years in prison in March. In addition to Odebrecht’s fines, its subsidiary Braskem has also agreed to pay $957 million for its own Petrobras bribery scheme.
Odebrecht might not be required to pay the full $4.5 billion if the government determines it does not have the ability to pay it. The long-running scandal already reduced Odebrecht’s 2014 income by several billion dollars and forced the company to reduce its workforce by more than 40,000. Since authorities uncovered the illegal activity, Odebrecht has admitted guilt and cleaned house to the government's satisfaction.
Odebrecht was also recently implicated in another scheme involving stadium construction for the 2014 World Cup. Brazilian authorities alleged that Odebrecht and four other companies colluded to drive up costs, bid-rig and overbill for the taxpayer-funded projects. Prosecutors said the companies began to organize their scheme immediately after international soccer organization FIFA awarded Brazil the tournament.
U.S. officials have had their own run-ins with bribery and kickback schemes as well. In August, international architecture firm CannonDesign was fined $12 million to settle charges that employees bribed a U.S. Department of Veterans Affairs medical center official for information that would help them in preparing bids for VA projects. One CannonDesign employee and the VA official were sentenced to prison, and the architecture firm agreed to make $2.5 million in procedural and policy changes to detect and prevent future fraudulent activity.