Paulo Lisboa | Brazil Photo Press | Getty Images
Brazil’s Former Finance Minister Antonio Palocci arrives at Instituto Medico Legal escorted by the police on September 26, 2016 in Curitiba, Brazil. Palocci was arrested in connection with the Car Wash probe on allegations that he favored construction company Odebrecht SA in contracts with state-run oil company Petroleo Brasileiro SA and that he and members of his political party benefited from those actions.
Brazilian construction firm Odebrecht and affiliated petrochemical company Braskem pleaded guilty in a U.S. court on Wednesday to violating American foreign bribery laws as part of a more than $3 billion deal resolving a sweeping corruption probe of Brazil’s state oil company.
The companies entered their pleas in federal court in Brooklyn in the major corruption case stemming from a wide-ranging probe into their role in a scheme involving political kickbacks at Brazil’s Petrobras.
The cumulative penalties were negotiated as part of a global settlement with U.S., Brazilian and Swiss authorities.
They are the first guilty pleas in the United States following an investigation in Brazil dubbed “Operation Car Wash” into corruption at Petrobras, which has led to dozens of arrests and political upheaval in Brazil.
The deal with Odebrecht, Latin America’s biggest engineering firm, is for 6.9 billion reais, more than $2 billion, a source told Reuters this week, and is part of an agreement with Brazilian prosecutors.
Under the global settlement deal, Braskem jointly owned by Odebrecht and Petrobras, has agreed to a global deal of $632 million, Assistant U.S. Attorney Alixandra Smith said in court. Of that sum, the United States gets 15 percent, Switzerland gets 15 percent and Brazil gets 70 percent, prosecutors said.
Both companies agreed to cooperate with authorities, implement compliance improvements and become subject to oversight by an external monitor.
The U.S. Justice Department and U.S. Securities and Exchange Commission said on Wednesday they will hold a press conference at 1 p.m. ET to discuss the charges against the companies.
It is one of the largest corruption cases on record. The total fines and penalties paid out by the companies exceed a 2008 agreement in which German engineering company Siemens paid $1.6 billion to U.S. and European authorities for paying bribes to win government contracts.