A Braskem petrochemical plant in Brazil
A Braskem petrochemical plant in Brazil (Braskem)

Settling wide-ranging bribery allegations for a record amount of money, Brazilian construction conglomerate Odebrecht SA admitted guilt Wednesday and agreed to pay $2.6 billion.

In a case involving an off-books accounting system designed solely for bribery, myriad wire transfers and sometimes just bags of cash, the company pleaded guilty to a single charge of conspiracy to violate provisions of the Foreign Corrupt Practices Act (FCPA) in a sweeping deal with United States prosecutors and authorities in Brazil and Switzerland.

Odebrecht’s guilty plea before Eastern District Judge Raymond Dearie was pursuant to a complex plea deal shepherded to conclusion by a team of attorneys led by William Burck, partner at Quinn Emanuel. The deal also includes a compliance monitor for the next three years.

Minutes later, one of the conglomerate’s 12 businesses, the petrochemical firm Braskem, also pleaded guilty to a single charge of conspiracy under the FCPA and said it will pay $632 million in criminal penalties. The Braskem agreement was reached with prosecutors and a defense team led by Robert Luskin of Paul Hastings. The company will also have a monitor for three years.

Braskem announced on Dec. 14 it had agreed to pay a total of $957 million, half up front and the rest over six years, to reach a global settlement for its role in the “Operation Car Wash” corruption scandal in Brazil in which bribes were paid over an 8-year period to obtain contracts from Petrobas, Brazil’s state-run oil company.

That figure represents the $632 million in criminal penalties and $325 million in disgorgement of profits in a separate civil settlement reached with the Securities and Exchange Commission and authorities in Brazil and Switzerland. The SEC will receive $65 million of the $325 million.

Eastern District U.S. Attorney Robert Capers said that together, the companies paid out “close to a billion dollars in bribes to officials at all levels of government in many countries.”

Deputy Assistant Attorney General Sung-Hee Suh said “Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit—a ‘Department of Bribery,’ so to speak—that systematically” paid money to corrupt officials.

The unit used a separate computer system to manage a shadow budget and send money through off-balance sheet, offshore accounts by wire transfer. They also, at times, used cash, delivering packages of money directly or in suitcases left at predetermined locations.

Braskem used the Odebrecht system to pay off politicians and political parties in Brazil as well as an official at Petrobas.

The cases were prosecuted by Assistant U.S. Attorneys Alixandra Smith and Julia Nestor of the Eastern District, FCPA Chief Dan Kahn, and trial attorneys Christopher Cestaro, Sarah Edwards, David Fuhr, Kevin Gingras, Lorinda Laryea and David Last of the Criminal Division’s Fraud Section.

Attorneys for company subsidiaries formally entered the pleas for Odebrecht and Braskem.

Both companies could have been eligible for even higher penalties, but each received a 25 percent discount for their cooperation in the probe.

Odebrecht was eligible to be fined up to $4.5 billion, but its ability to pay that amount, without forcing layoffs or hurting the company, was in doubt. Subject to verification ahead of sentencing on April 17, the Justice Department, along with its counterparts in Brazil and Switzerland, indicated it was willing to accept the lower number of $2.6 billion.