Odebrecht Pleads Guilty Bribery Charges, Agrees to at Least 3.5 Billion USD in Penalties

Brazilian construction company Odebrecht S.A. has settled anticorruption charges with officials across the world, agreeing to a settlement of at least $2.6 billions USD — and up to $4.5 billion USD — with the U.S. Department of Justice to conclude an investigation that dates back two years. Penalties will be paid to various governmental agencies in the United States, Brazil, and Switzerland.

The Salvador-based company, whose former CEO Marcelo Odebrecht was sentenced to 19 years in prison last March for corruption, money laundering and conspiracy, admitted to violating the Foreign Corrupt Practices Act by paying what Justice Department documents show as nearly $800 million in bribes throughout a dozen countries since 2001 to win bids that have generated more than $3.3 billion in profits.

Much of the illicit activity centered around corruption that led to lucrative contracts with embroiled state-run Brazilian oil company Petrobras in a scandal that has shaken the nation’s political world. The firm also won almost $1.5 billion USD in contracts from Mexican energy giant Pemex.

Some $11 million USD in bribes were made in Colombia, where government officials have responded by threatening to void tainted project awards. Even before the settlement, the nation began looking for a new suitor to take over a $857 million USD project to make the Magdalena River more navigable that had previously been won by Odebrecht.

A bulk of the bribes in Colombia took place during the administration of former President Álvaro Uribe, including an alleged $6.5 million illicit payment to a government official in charge of awarding a large constuction project. According to local media, Gabriel García Morales was the one who took the bribe for his role in awarding a bid for a large section of the country’s Ruta del Sol roadway project.

On Twitter, Uribe acknowledged that “primary indications” suggest that García had taken bribes during his administration. He urged for the “most severe sanction” for anyone found guilty of receiving bribes, both on his watch or since Santos took over.

Other contracts awarded to Odebrecht more recently, including the the Magdalena River renovation as well as the Puerto Boyacá-Chiquinquirá and Ocaña-Gamarra highway projects, have come during the administration of President Juan Manual Santos, who took office in August 2010.

Uribe, who is now a senator and the chief political rival to Santos, is urging for the president to reveal all information, including the possibility of a meeting with the firm in Panama last year, related to how such bids were won by Odebrecht. “Tell the country everything you know about these bribes,” said Uribe this week.

Odebrecht has said that it can only afford to pay $2.6 billion USD of the imposed fine from a settlement that also includes Braskem SA, an Odebrecht affiliate. The São Paulo-based petrochemicals manufacturer may pay as much as $632 million USD to the Justice Department and $325 million USD to the Securities and Exchange Commission (SEC) in the United States. The final penalty sums are expected to be determined in an April 17 hearing.

“Odebrecht has admitted that for more than a decade it operated an off-books internal financial structure whose sole purpose was to facilitate bribery on a massive scale,” said Sung-Hee Suh, a deputy assistant attorney general on a media call, per the Miami Herald. “This was a hidden but fully functioning Odebrecht business unit — a department of bribery so to speak — that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents.”

This article has been edited and updated to include more information about projects in Colombia.

Photo Credit: Rogério Reis