Braskem Agrees Fine for “Car Wash” Scandal
Brazilian polyolefins producer Braskem has agreed to pay fines and indemnities worth $957 million relating to the “car wash” scandal that erupted in 2014. The company has signed a leniency agreement with Brazilian authorities under which it will continue to cooperate with them and improve its compliance system.
It is not clear whether the fines cover just the Brazilian part of the allegations or include those from the US as well. Braskem said earlier this month that it was in advanced negotiations with authorities in Brazil and the US. A report by news agency Bloomberg said both countries’ authorities were set to impose combined penalties of $2.5 billion on Braskem and one of its two major shareholders, engineering and construction firm Odebrecht – the other is oil group Petrobras – for violating anti-bribery laws.
According to the US business newspaper Wall Street Journal, Braskem has agreed to pay about half of the fines and damages up front, once the courts have ratified the agreement, with the rest paid in six annual instalments starting in January 2018.
The corruption scandal, which has dominated Brazil over the past three years, has spread throughout the country and implicated several construction companies, banks and shipyards as well as politicians from several parties. Investigators probed possible payoffs at projects, including two that were related to the 2016 Rio de Janeiro Olympic Games, court documents showed.
Odebrecht issued a statement on Dec. 1 acknowledging its participation in illicit actions in its business activities. “This was a grave error. We violated our own principles and transgressed against the values of honesty and ethics. We will not let this happen again,” it said. Marcelo Odebrecht resigned as CEO of the construction conglomerate after his arrest last year. He was convicted on 11 counts of corruption involving bribes of $64 million to Petrobras executives and was sentenced to more than 19 years in jail.
In separate news, Brazil’s federal auditing court (TCU) has asked Petrobras to temporarily suspend its divestment program while the court reviews asset sales procedures. The court said five sales that are nearing completion – said to account for about $3.3 billion – can be finalized but Petrobras must refrain from signing any fresh deals until a new order is issued.
The court said that, as a state-controlled entity, Petrobras’ divestiture program should be much more transparent. The Brazilian conglomerate said it is reviewing its divestment procedures and is committed to following the court’s recommendations for improvement. Petrobras confirmed its aim to raise $15.1 billion by the end of 2016 and another $19.5 billion in the next two years.
