Brazilian prosecutors have said petrochemical company Braskem has ful!lled the compliance obligations from its record-breaking $2.6 billion foreign bribery settlement.
Brazil’s Federal Prosecution Service (MPF) said in an 11 March statement (http://www.mpf.mp.br/pr/sala-de-imprensa/noticias- pr/acordo-de-leniencia-da-lava-jato-pr-e-o-primeiro-no-brasil-a-levar-a-criacao- e-implementacao-de-programa-de-compliance-certi!cado-por-monitoria- independente-em-empresa-envolvida-com-corrupcao) that Braskem had established mechanisms to ensure “maximum levels of ethics and transparency” following an “intense evaluation”.
Prosecutors said the company has provided authorities with all appropriate information and documents related to the conduct, ceased all illicit practices and is on track to pay Brazil $460 million – the amount it was required to pay to the country as part of the 2016 settlement.
Braskem, alongside parent company Odebrecht, agreed to pay (https://globalinvestigationsreview.com/article/1158724/the- odebrecht-fact-sheet) $2.6 billion to resolve investigations by Swiss, Brazilian and US authorities into bribes paid across 12 countries from 2001 to 2016. The company agreed to pay another $109 million (https://globalinvestigationsreview.com/short-cut/2019/may/28#1193411) to settle with Brazil’s Ministry of Transparency and Comptroller General of the Union and the O”ce of the Attorney General over the same matter in May 2019.
As part of the trilateral settlement, Braskem agreed to retain independent monitors in Brazil and the US for a period of three years.
The company appointed Guy Singer and Billy Jacobson at Orrick Herrington & Sutcli#e in New York to be both the US and Brazilian monitor. The pair concluded that the company had met all its obligations in Brazil from the 2016 agreement, according to the MPF.
Braskem’s lawyer, Luis Wielewicki at Sampaio Ferraz Advogados in São Paulo, told GIR: “This is a major precedent for monitorships in Brazil. It brings a lot of experience for future monitor programmes and Braskem has done a wonderful job which will be considered as a parameter for the future.”
“The change of culture is the main goal and it’s important to show that companies can implement important compliance culture,” he added.
MPF prosecutor Júlio Noronha said in a statement: “The case reveals that investigations into corruption do not destroy companies. On the contrary, success in creating and implementing Braskem’s compliance programme shows that companies involved in illicit practices can change and contribute to a healthier business environment in Brazil.”
He added that: “A company with compliance practices embedded in its corporate culture serves as a model for others to follow the same path.”
The company is still waiting to !nd out whether the US Department of Justice and US Securities and Exchange Commission believes it has ful!lled its obligations from the settlement.
Braskem’s case has not been without its hurdles. In October 2019, the company almost violated the terms of its DOJ settlement (https://globalinvestigationsreview.com/article/jac/1210146/braskem-may-have- inadvertently-violated-doj-plea-deal) when it sought a tax deduction on a portion of its Brazilian payments – a move that was strictly prohibited in the 2016 resolution.
One month later, a Brooklyn federal court unsealed an indictment against Braskem’s former CEO Carlos Grubisich (https://globalinvestigationsreview.com/article/jac/1211142/us- charges-former-braskem-ceo-over-%E2%80%9Csecret-slush-fund%E2%80%9D), alleging he diverted hundreds of millions of dollars from the company to “a secret slush fund” used, in part, to pay bribes to Brazilian o”cials.
The case constitutes part of a wider Brazilian probe known as Operation Car Wash, which was launched in 2014 to investigate bribes paid to o”cials at state- controlled oil company Petrobras.
The investigation recently entered its seventh year (https://globalinvestigationsreview.com/short-cut/2020/march/11#1216131) and has so far resulted in 253 convictions while prosecutors have recovered $800 million in assets.
Brazilian monitor replaced
Braskem had initially enlisted lawyer Isabel Franco to be the Brazilian monitor in 2017, who was a partner at Koury Lopes Advogados at the time but has subsequently moved to Azevedo Sette Advogados in São Paulo. However, the company chose to activate a clause in the settlement agreement that allowed it to select one !rm to act as monitor in both Brazil and the US to enhance e”ciency and consistency.
Counsel for Braskem
Sampaio Ferraz Advogados
Partner Luis Wielewicki and Rodrigo Maia in São Paulo
In the US
Partners Jay Dardin and Corinne Lammers in Washington, DC