SEC v. Braskem, S.A. (D.D.C. 2016)
Case Details
- Case Name
- SEC v. Braskem, S.A. (D.D.C. 2016)
- Foreign Official
- An official from the Brazilian state-owned oil company, Petrobras; Multiple unnamed Brazilian legislators.
- Date of Conduct
-
2006 to 2014
- Nature of Business
- Braskem S.A., headquartered in São Paulo, Brazil, produces petrochemical and thermoplastic products. Braskem maintains American Depository Shares on the New York Stock Exchange. It is a partially-owned subsidiary of Odebrecht S.A., a private holding company in Brazil that consists of a conglomerate operating in various sectors, including engineering, oil and gas, and real estate development.
- Influence to be Obtained
- According to the SEC, between 2006 and 2014, Braskem engaged in a scheme to direct improper payments to various Brazilian officials to assist the company retain or obtain business. As part of the scheme, Braskem allegedly made approximately $250 million in improper payments, which netted the company $325 million in profits.
Specifically, the SEC alleges that Braskem used a myriad of intermediaries, subsidiaries, and offshore bank accounts in an effort to disguise the improper payments to government officials. Braskem allegedly created false commissions and invoices for consultants at shell companies for services that were never actually rendered. Further, the shell companies often transferred the funds they received from Braskem to off-book accounts held by Braskem’s controlling company, Odebrecht. Once the money arrived in Odebrecht’s control, it facilitated the payments to the government officials through another web of disguised companies and bank accounts.
According to the SEC, the alleged scheme involved three different components. First, Braskem allegedly paid $4.3 million to an official at Brazil’s state-owned oil company, Petrobras, and a Brazilian congressman, in exchange for those officials’ willingness to ensure that Petrobras did not terminate a Braskem-Petrobras joint venture. Second, Braskem allegedly paid the same Petrobras official and Brazilian congressman $20 million in exchange for those officials’ willingness to influence a Petrobras-Braskem supply contract to reduce the cost of a key petrochemical input for Braskem. Third, Braskem allegedly paid bribes to Brazilian officials in exchange for certain legislative measures that gave Braskem beneficial tax credits.
- Enforcement
- On December 21, 2016, the SEC announced a global settlement against Braskem alongside the DOJ, as well as Brazilian and Swiss authorities. According to the SEC, Braskem violated the FCPA’s anti-bribery, books-and-records, and internal controls provisions. As part of Braskem’s resolution with the SEC, the company agreed to disgorge $325 million in profits. Of the total disgorgement, Braskem agreed to pay $65 million to the SEC and $260 million to Brazilian authorities. Separately, Braskem entered into a plea agreement with the DOJ wherein it agreed to pay a total criminal penalty of $632.6 million divided between U.S., Brazilian, and Swiss authorities.
- Amount of the Value
- Approximately $250 million.
- Amount of Business Related to Payment
- Approximately $325 million.
- Intermediary
- Offshore Shell Companies; Agents.
- Citizenship of Parent Entity
- Brazil
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 957,000,000
Defendants
Braskem, S.A.
- Citation
- SEC v. Braskem, S.A., No. 1:16-cv-02488 (D.D.C. 2016)
- Other Statutory Provision
- None
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Brazil
