Former CEO of Braskem Indicted for His Role in Bribery Scheme
Approximately $250 Million Allegedly Diverted from Braskem Through a Secret Slush Fund to Pay Bribes to Government Officials and Political Parties in Brazil
An indictment was unsealed today in federal court in Brooklyn charging Jose Carlos Grubisich, the former Chief Executive Officer (CEO) of Braskem S.A. (Braskem), a publicly traded Brazil-based petrochemical company, for his role in a massive bribery and money laundering scheme involving Braskem and its parent company, Odebrecht S.A. (Odebrecht). The scheme allegedly resulted in the diversion of hundreds of millions of dollars from Braskem to a secret slush fund used, in part, to pay bribes to government officials, political parties and others in Brazil to obtain and retain business. Grubisich, who also served as a member of the Board of Directors of Braskem, and in various capacities for Odebrecht, was charged with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), one count of conspiracy to violate the books and records provisions of the FCPA and one count of conspiracy to commit money laundering.
Grubisich was arrested this morning, and will be arraigned this afternoon before United States District Judge Raymond J. Dearie.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.
“As alleged in the indictment, Jose Carlos Grubisich used his position as CEO of a major publicly traded petrochemical company to funnel hundreds of millions of dollars through offshore accounts to bribe power brokers and serve the interests of his company,” stated United States Attorney Donoghue. “Today’s indictment once again demonstrates the commitment of the U.S. Department of Justice to investigate and prosecute those who take advantage of the United States financial system to further their financial crimes.”
“Grubisich and other senior executives at Braskem and Odebrecht allegedly engaged in a massive and sophisticated international bribery and money laundering scheme, employing secret slush funds, shell companies, and false accounting,” stated Assistant Attorney General Benczkowski. “As demonstrated by the charges unsealed today, the Department continues to work closely with our domestic and international partners to root out and prosecute corporate fraud and corruption at the highest levels.”
As alleged in the indictment, between approximately 2002 and 2014, Grubisich and his co-conspirators created a slush fund by making payments from Braskem’s bank accounts in Brazil, New York and Florida pursuant to fraudulent contracts with offshore shell companies secretly controlled by Braskem. The shell companies then funneled the slush funds to a department within Odebrecht that was responsible for making bribe payments on Braskem’s behalf.
As CEO of Braskem, Grubisich participated in negotiating and approving the bribes to government officials, including the payments made to ensure that Braskem retained a contract for a significant petrochemical project in Brazil and to ensure that Braskem could obtain favorable pricing in contract negotiations with Petroleo Brasileiro S.A. – Petrobras, Brazil’s state-owned and state-controlled oil company. Grubisich regularly discussed the bribe payments with his co-conspirators and was informed of bribe payments made on behalf of Braskem. Various bribe payments that were negotiated and authorized by Grubisich were ultimately paid after Grubisich left his position as CEO in 2008, but while he continued to serve in other capacities at Odebrecht and Braskem, and while he was a stockholder of Braskem.
Also while serving as CEO of Braskem, Grubisich agreed to falsify Braskem’s books and records by causing Braskem to record the payments to the offshore shell companies controlled by Braskem as “commissions.” He also signed false certifications submitted by Braskem to the United States Securities and Exchange Commission that attested to the fairness and accuracy of Braskem’s annual reports and financial condition, and to the disclosure of any fraudulent conduct by Braskem’s management and other employees with control over Braskem’s financial reporting.
On December 21, 2016, Braskem and Odebrecht pleaded guilty in the Eastern District of New York to criminal informations separately charging each with conspiracy to violate anti-bribery provisions of the FCPA for their involvement in the bribery and money laundering scheme.
The charges in the indictment announced today are allegations, and the defendant is presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant United States Attorneys Alixandra Smith and Julia Nestor of the Office’s Business and Securities Fraud Section, and Criminal Division Fraud Section FCPA Assistant Chief Lorinda Laryea and Fraud Section Trial Attorney Leila Babaeva. The FBI’s International Corruption squad in New York investigated this case.
The Criminal Division’s Office of International Affairs also provided substantial assistance. The Securities and Exchange Commission, the Brazilian Ministerio Publico Federal and Departamento de Polícia Federal, and the Office of the Attorney General in Switzerland provided significant cooperation.
JOSE CARLOS GRUBISICH
Sao Paulo, Brazil
E.D.N.Y. Docket No. 19-CR-102 (RJD)