Dive Brief:
- Brazilian construction heavyweight Marcelo Odebrecht has been sentenced, along with other company executives, to 19 years in prison on corruption, money laundering and organized crime charges, The Wall Street Journal reported.
- Odebrecht, former CEO of Odebrecht SA, South America's largest construction company, has been in police custody since his arrest in relation to "Operation Car Wash," a $2 billion bribery and embezzlement plot against Petrobras, the state oil company, according to Yahoo News.
- Prosecutors allege that Odebrecht's company, along with others, paid bribes to Petrobras executives in exchange for contracts, for which his company then overbilled. Officials say the companies then directed some of the money to politicians, specifically the ruling Workers' Party.
Dive Insight:
Prosecutors said the scheme, which has resulted in the arrests and investigations of prominent Brazilian businesspersons and politicians, goes back to 2006, Yahoo News reported. Even former President Luiz Inacio Lula da Silva is under investigation.
The Journal reports that such a severe sentence for a wealthy Brazilian such as Odebrecht is unusual and perhaps signals a change in the country's justice system. Odebrecht's attorney, Nabor Bulhões, said the sentence was "unfair and unjust" and indicated they will appeal the decision. Failing that, onlookers say Odebrecht could testify against other participants in exchange for a reduced sentence.
According to a 2015 Kroll Global Fraud Report, 75% of construction, engineering and infrastructure companies experienced a fraud incident last year. The report lists theft of physical assets or stock (36%) and vendor, supplier or procurement fraud (24%) as the most common offenses and reports that 32% of those responding to the survey said a senior executive or middle manager was involved in a fraud against the company.
