Odebrecht Files for Bankruptcy Protection
Brazilian conglomerate Odebrecht, the majority stakeholder in petrochemical company Braskem, has filed for bankruptcy protection to restructure $13 billion of debt following its involvement in the country’s “car wash” money laundering scandal that erupted five years ago.
Several construction companies, including Odebrecht, were found to have bribed politicians to secure lucrative government contracts.
The application for bankruptcy does not include Braskem and Odebrecht Engineering and Construction, as well as several others of the group’s subsidiaries.
Odebrecht confirmed that it, and its subsidiaries, would continue to operate as usual during the restructuring, which is said to be one of the largest ever filed in Brazil.
The company has shrunk from more than 180,000 employees in 2014 to 48,000 currently, due to the economic crisis that adversely affected its investment plans as well as the impact on its reputation from its “wrongdoings” and the difficulties faced by the companies that cooperated with the authorities to access credit and compete for new service contracts.
Speaking to US news agency Associated Press, economist Monica de Bolle said: “Once Odebrecht's corruption came to light, the tentacles were so widespread that it was inevitable that this company wouldn't hold itself together.”
Odebrecht has been in a steady downfall since the scandal, she said, and was a contributing factor to Brazil's 2015-2016 recession and subsequent sluggish recovery.
Both Odebrecht and Braskem pleaded guilty in December 2016 to charges brought by the US Department of Justice and agreed to pay a combined fine of at least $3.5 billion, the largest ever penalty in a foreign bribery case.
