Recently, the Justice Department unsealed an indictment charging Jose Carlos Grubisich, the former CEO of Braskem S.A. with participating in an FCPA conspiracy with Odebrecht S.A.  Grubisisch was arrested last Wednesday. Copy Here.

Grubisich is charged with one count of conspiracy to violate the FCPA bribery provisions, one count of FCPA conspiracy to violate the FCPA’s books and records provisions and falsely certifying financial reports, and one count of conspiracy to commit international money laundering.

Grubisich was CEO of Braskem from 2002 to 2008, and was a consultant to Odebrecht from 2012 until 2015.  Braskem’s controlling shareholder is Odebrecht with nearly 40 percent ownership and just over 50 percent of the voting shares.  Petrobas, Brazil’s state-owned oil and gas company, owns one-third of Braskem.

Odebrecht and Braskem plead guilty in 2016 to FCPA violations for participation in a global bribery scheme relating to construction projects.  The companies agreed to pay $3.5 billion as part of a global settlement in the United States, Brazil and Switzerland.

Braskem has American Depositary Receipts on the New York Stock Exchange and agreed to pay DOJ and the SEC $159.8 million.  It paid a criminal penalty of $94.8 million and disgorged $65 million to the SEC.  Odebrecht was forced into bankruptcy, citing large losses since the FCPA resolution.

The indictment alleges that from 2002 to 2014, Grubisich and other Braskem and Oderecht employees diverted approximately $250 million from their companies to fund a secret slush fund which was used to pay bribes to politicians, political parties and government officials.

Grubisich participated by negotiating and approving bribes to government officials and political parties using money from the slush fund.  The bribes helped Braskem secure favorable pricing for supply contracts with Petrobas.

Grubisich also assisted in falsifying Braskem’s books and records.  In particular, he certified that some of the payments to the offshore companies were “commissions” rather than bribes.

In addition, Grubisich submitted false certifications to the SEC that Braskem’s officers disclosed all fraudulent conduct related to its financial reporting.  Some of the bribes included in the indictment occurred after Grubisich stepped down from his position as CEO but while he was a consultant and served in other capacities at Braskem and Odebrecht.

The FCPA counts carry a maximum penalty of five years imprisonment and the money laundering count carries a maximum penalty of 20 years imprisonment.