Washington, DC - An indictment was unsealed last Wednesday charging a former chief executive officer (CEO) of Braskem S.A. (Braskem), a publicly traded Brazilian petrochemical company, for his role in a massive bribery and money laundering scheme involving Braskem and its parent company, Odebrecht S.A. (Odebrecht), that resulted in the diversion of hundreds of millions of dollars from Braskem into a secret slush fund that was used, in part, to pay bribes to government officials, political parties and others in Brazil to obtain and retain business.
Jose Carlos Grubisich, 62, a citizen of Brazil who served as the CEO and a member of the board of directors of Braskem, as well as in various capacities for Odebrecht, was charged with one count of conspiracy to violate the anti-bribery provision of the Foreign Corrupt Practices Act (FCPA), one count of conspiracy to violate the books and records provision of the FCPA and to fail as a corporate officer to certify financial reports and one count of conspiracy to commit international money laundering. Grubisich was arrested this morning, and is scheduled to be arraigned this afternoon before U.S. District Judge Raymond J. Dearie of the Eastern District of New York.
“Grubisich and other senior executives at Braskem and Odebrecht allegedly engaged in a massive and sophisticated international bribery and money laundering scheme, employing secret slush funds, shell companies, and false accounting,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “As demonstrated by the charges unsealed today, the Department continues to work closely with our domestic and international partners to root out and prosecute corporate fraud and corruption at the highest levels.”
“As alleged in the indictment, Jose Carlos Grubisich used his position as CEO of a major publicly traded petrochemical company to funnel hundreds of millions of dollars through offshore accounts to bribe power brokers and serve the interests of his company,” said U.S. Attorney Richard P. Donoghue for the Eastern District of New York. “Today’s indictment once again demonstrates the commitment of the U.S. Department of Justice to investigate and prosecute those who take advantage of the United States financial system to further their financial crimes.”
As alleged in the indictment, between approximately 2002 and 2014, Grubisich, together with other co-conspirators, including certain former Braskem and Odebrecht employees, engaged in a widespread bribery and money laundering scheme that resulted in the diversion of approximately $250 million of Braskem’s funds into a secret slush fund, which was used, in part, to pay bribes to government officials, political parties and others in Brazil to obtain and retain business and certain business advantages for Braskem. The slush fund was allegedly generated by payments from Braskem’s bank accounts in Brazil, New York and Florida pursuant to fraudulent contracts with offshore shell companies that were secretly controlled by Braskem. These shell companies funneled the slush funds to a department within Odebrecht responsible for making bribe payments, which ultimately made corrupt payments on Braskem’s behalf, the indictment alleges.
Additionally, as alleged in the indictment, while CEO of Braskem, Grubisich was involved in negotiating and approving bribes to government officials using money from the slush fund. These included alleged payments made to ensure that Braskem could retain a contract for a significant petrochemical project in Brazil, and to ensure that Braskem could obtain favorable pricing in contract negotiations with Petroleo Brasileiro S.A. – Petrobras, Brazil’s state-owned and state-controlled oil company. Grubisich regularly discussed the bribe payments with other co-conspirators, and was kept informed about bribe payments made on behalf of Braskem, the indictment alleges. Certain of the bribe payments that were allegedly negotiated and authorized by Grubisich were ultimately paid after Grubisich left his position as CEO of Braskem in 2008, but while he continued to serve in other capacities at Odebrecht and Braskem, and while he was a stockholder of Braskem.
Furthermore, as alleged in the indictment, while CEO of Braskem, Grubisich agreed to falsify Braskem’s books and records by causing Braskem to falsely record the payments to the offshore shell companies controlled by Braskem as “commissions.” Grubisich also signed false certifications submitted to the SEC that, among other things, attested that Braskem’s annual reports fairly and accurately represented Braskem’s financial condition, and that Grubisich, as Braskem’s principal officer, had disclosed all fraudulent conduct by Braskem’s management and other employees with control over Braskem’s financial reporting, the indictment alleges.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
Braskem and Odebrecht have each pleaded guilty in the Eastern District of New York to one-count criminal informations separately charging each with conspiracy to violate the anti-bribery provisions of the FCPA for their involvement in the widespread bribery and money laundering scheme. The cases are also assigned to Judge Dearie.
The FBI’s International Corruption squad in New York investigated this case. Assistant Chief Lorinda Laryea and Trial Attorney Leila Babaeva of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Alixandra Smith and Julia Nestor of the Eastern District of New York are prosecuting the case.
The Criminal Division’s Office of International Affairs also provided substantial assistance. The U.S. Securities and Exchange Commission, the Brazilian Ministerio Publico Federal, the Brazilian Departamento de Polícia Federal and the Office of the Attorney General of Switzerland provided significant cooperation.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters.