In the Matter of Centrais Elétricas Brasileiras S.A. (2018)

• Case Name
• In the Matter of Centrais Elétricas Brasileiras S.A. (2018)

• Date Filed
• 12/26/2018

• Enforcement Agency
• SEC

• Countries
• Brazil

• Foreign Official
• Brazilian government officials, including the former Eletronuclear president, and Brazilian political parties.

• Date of Conduct
• 2009 to 2015

• Nature of Business
• Centrais Elétricas Brasileiras S.A. (“Eletrobras”) is a state-controlled Brazilian power generation, transmission, and distribution company based in Rio de Janeiro, Brazil. Eletrobras maintains stock that is registered with the SEC under Section 12(b) of the Exchange Act and traded on the New York Stock Exchange. The Brazilian federal government currently owns a 51% stake in Eletrobras. Eletrobras has a 99 percent ownership stake in Termonuclear S.A. (“Eletronuclear”), a nuclear power generation company.

• Influence to be Obtained
• According to the SEC, from approximately 2009 through 2015, officers at Eletronuclear allegedly engaged in a bid-rigging and bribery scheme involving the construction of a nuclear power plant. After receiving bribes from Brazilian construction company executives, Eletronuclear officers, including the former president of Eletronuclear, allegedly rigged bids in favor of certain private Brazilian construction companies and thus inflated the costs of the nuclear power plant project. The former president of Eletronuclear allegedly received up to $4.1 million relating to the construction of the plant. Further, construction company executives allegedly agreed to pay two of Brazil’s largest political parties one percent of the power plant contract value each.
  
  
  The SEC further alleged that Eletrobras did not effectively maintain a sufficient system of internal accounting controls over Eletronuclear’s financial reporting, which allowed this bid-rigging and bribery scheme to occur. Eletronuclear recorded these payments made to contractors, a percentage of which was used for bribes, as legitimate expenditures. As a result of this alleged failure of internal accounting control, Eletrobras’s books and records inaccurately reflected their transactions on this project.

• Enforcement
• On December 26, 2018, the SEC settled its enforcement action against Eletrobras for violations of the FCPA’s books-and-records and internal controls provisions. According to the cease-and-desist order, Eletrobras agreed to pay a civil monetary penalty of $2,500,000.
   
  Eletrobras reported that the DOJ had closed its investigation of Eletrobras.

• Amount of the Value
• $9 million.

• Amount of Business Related to Payment
• Not stated.

• Intermediary
• Officials of Subsidiary Company.

• Citizenship of Parent Entity
• Brazil

• Total Sanction
• $ 2,500,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 2,500,000

• Industries
• Energy

• Regions
• Latin Amer. & Carib

Centrais Elétricas Brasileiras S.A. (“Eletrobras”)

• Citation
• In the Matter of Centrais Elétricas Brasileiras S.A., Admin. Proc. File No. 3-18962 (Dec. 26, 2018).

• Date Filed
• 12/26/2018

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None.

• Disposition
• Cease-and-Desist Order, Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• Brazil

• Individual Sanction
• $2,500,000