United States v. Odebrecht S.A. (E.D.N.Y. 2016)
United States v. Braskem S.A. (E.D.N.Y. 2016)
United States v. Jose Carlos Grubisich (E.D.N.Y. 2019)
United States v. Ricardo Alberto Martinelli Linares (E.D.N.Y. 2020)
United States v. Luis Enrique Martinelli Linares (E.D.N.Y. 2020)
Case Details
- Case Name
- United States v. Odebrecht S.A. (E.D.N.Y. 2016)
United States v. Braskem S.A. (E.D.N.Y. 2016)
United States v. Jose Carlos Grubisich (E.D.N.Y. 2019)
United States v. Ricardo Alberto Martinelli Linares (E.D.N.Y. 2020)
United States v. Luis Enrique Martinelli Linares (E.D.N.Y. 2020)
- Countries
- Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela
- Foreign Official
- Multiple unnamed officials from Brazil’s state-owned oil company, Petróleo Brasileiro S.A. (“Petrobras”); Multiple unnamed Brazilian government officials; Unnamed government officials in Angola, Argentina, Colombia, Dominican Republic, Ecuador; Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
- Date of Conduct
-
2001 to 2016
- Nature of Business
- Odebrecht S.A. is a Brazilian private holding company that operates in twenty-seven countries in various sectors, including engineering, oil and gas, and real estate development. Odebrecht’s partially owned subsidiary, Braskem S.A., is headquartered in São Paulo, Brazil and produces petrochemical and thermoplastic products. Braskem maintains American Depository Shares on the New York Stock Exchange.
Jose Carlos Grubisich, a Brazilian citizen, was the CEO of Braskem from 2002 – 2008 and served as a member of the company’s board of directors from 2010 – 2012.
Luis Enrique Martinelli Linares and Ricardo Alberto Martinelli Linares, both dual Italian and Panamanian citizens, served as an intermediary for Odebrecht.
- Influence to be Obtained
- According to the DOJ, between 2001 and 2016, Odebrecht coordinated a bribery scheme to make approximately $788 million in improper payments to foreign officials in at least twelve countries to obtain or retain business.
Specifically, Odebrecht allegedly sought to influence foreign officials through the payment of bribes, primarily to secure public works contracts or other contracts with state-owned enterprises. To facilitate these payments, the DOJ claims that Odebrecht generated unrecorded funds through off-book transactions involving overhead payments from subsidiaries, overcharges to service providers not included in project budgets, undeclared retainers, and self-insurance transactions. Odebrecht then allegedly sent the unrecorded funds to an “elaborate, secret financial structure.” According to the DOJ, the structure eventually developed into a separate entity, known as the Division of Structure Operations, with its own clandestine communication system. The Division of Structure Operations would allegedly receive the off-book funds from Odebrecht and organize their delivery to the designated officials, sometimes utilizing numerous offshore entities and bank accounts to disguise the operation.
In Panama, Luis Martinelli and Ricardo Martinelli allegedly served as intermediaries to high-ranking government officials on behalf of Odebrecht. According to the DOJ, both individuals facilitated the payment of approximately $28 million in bribes to Panamanian officials.
Part of Odebrecht’s alleged bribery scheme involved the petrochemical company, Braskem. In a separate action against Braskem, the DOJ claims that Braskem made improper payments to Brazilian officials, often diverting funds through Odebrecht’s Division of Structured Operations to do so. The DOJ alleges that as CEO of Braskem, Grubisich, together with other unnamed coconspirators, approved this diversion of funds and resulting illicit payments. Specifically, the DOJ alleges that Braskem generated false commissions and invoices using shell companies and then transferred the funds to off-book accounts held by Odebrecht. Once Odebrecht had the funds, its internal financial structure would allegedly deliver the payments to the Brazilian officials. Odebrecht and Braskem allegedly used this process to obtain numerous benefits, including (i) the continuation of contracts with Petrobras, (ii) favorable terms in supply agreements with Petrobras, and (iii) tax advantages from the government of Brazil.
- Enforcement
- On December 21, 2016, the DOJ announced that Odebrecht had pleaded guilty to one count of conspiracy to violate the FCPA’s anti-bribery provision. In its plea, Odebrecht agreed to pay criminal penalties of up to $4.5 billion; however, it represented that it was only able to pay a penalty of $2.6 billion. The total penalty paid by Odebrecht was divided between the U.S., Brazilian, and Swiss authorities, with the U.S. and Switzerland receiving 10% each and Brazil receiving the remaining 80%. U.S. and Brazilian authorities planned to conduct an independent analysis to verify whether Odebrecht is only able to pay a $2.6 billion criminal penalty and would complete the investigation by March 31, 2017. On April 11, 2017, the DOJ confirmed that Odebrecht was unable to pay a penalty in excess of $2.6 billion and as a result, the DOJ reduced the amount Odebrecht owed to the United States in criminal penalties from $260 million to
$93 million.
Similarly, Braskem pleaded guilty to one count of conspiracy to violate the FCPA’s anti-bribery provision. According to the plea agreement, Braskem agreed to pay a total criminal penalty of approximately $632 million. Of the total criminal penalty against Braskem, the U.S., Swiss, and Brazilian authorities would each receive approximately $94.9 million, $94.9 million, and $442.8
million, respectively.
Braskem was separately charged by the SEC for violations of the FCPA’s antibribery, books-and-records, and internal controls provisions. According to its resolution with the SEC, Braskem agreed to disgorge a total of $325 million to U.S. and Brazilian authorities.
On November 20, 2019, the DOJ unsealed an indictment, filed on February 27, 2019, against Jose Carlos Grubisich for his alleged involvement in the scheme. The indictment charged Grubisich with three conspiracy counts: (1) conspiracy to violate the FCPA’s anti-bribery provision, (2) conspiracy to violate the FCPA’s books and records provision, and (3) conspiracy to commit money laundering. The charges against Grubisich are currently pending. Grubisich pleaded guilty
to one count of conspiracy to violate the anti-bribery provision of the FCPA and one count of conspiracy to violate the books and records provision of the FCPA
on April 15, 2021 and is awaiting sentencing.
On July 6, 2020, the DOJ announced it had charged Luis Martinelli and Ricardo Martinelli with charges of money laundering and conspiracy to commit money laundering. The charges remain pending.
- Amount of the Value
- Approximately $788 million (Odebrecht); Approximately $250 million (Braskem).
- Amount of Business Related to Payment
- Approximately $788 million (Odebrecht); Approximately $250 million (Braskem).
- Intermediary
- Third-Party Distributors.
- Citizenship of Parent Entity
- Brazil
- Total Sanction
- $ 252,893,800
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 1,050,625,336
Defendants
Odebrecht S.A.
- Citation
- United States v. Odebrecht S.A., No. 16-cr-00643 (E.D.N.Y. 2016);
- Other Statutory Provision
- None
- Disposition
- Plea Agreement
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- Brazil
Braskem S.A.
- Citation
- United States v. Braskem S.A., No. 16-cr-00644 (E.D.N.Y. 2016).
- Other Statutory Provision
- None
- Disposition
- Plea Agreement
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Brazil
Jose Carlos Grubisich
- Citation
- United States v. Jose Carlos Grubisich, No. 19-cr-00102 (E.D.N.Y. 2019)
- FCPA Statutory Provision
-
- Conspiracy
- Conspiracy: Anti-Bribery
- Conspiracy: Books-and-Records
- Other Statutory Provision
- Conspiracy (Money Laundering)
- Disposition
- Plea Agreement
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- Brazil
- Individual Sanction
- Forfeiture of $2,242,435; pending.
Luis Enrique Martinelli Linares
- Citation
- United States v. Luis Enrique Martinelli Linares, No. 20-mj-00498 (E.D.N.Y. 2020).
- Other Statutory Provision
- Conspiracy (Money Laundering); Money Laundering.
- Defendant Jurisdictional Basis
- Territorial Jurisdiction, Conspiracy
- Defendant's Citizenship
- Panama, Italy
- Individual Sanction
- Pending.
Ricardo Alberto Martinelli Linares
- Citation
- United States v. Ricardo Alberto Martinelli Linares, No. 20-mj-00498 (E.D.N.Y. 2020).
- Other Statutory Provision
- Conspiracy (Money Laundering); Money Laundering.
- Disposition
- Pending, Pending
- Defendant Jurisdictional Basis
- Territorial Jurisdiction, Conspiracy
- Defendant's Citizenship
- Panama, Italy
- Individual Sanction
- Pending.
