FCPAméricas Blog

Brazil’s “Car Wash” by the Numbers

Author: Guest Author


This guest post is from Eloy Rizzo, a senior attorney with the law firm KLA – Koury Lopes Advogados in São Paulo, Brazil. Mr. Rizzo focuses on anti-corruption and compliance issues, as well as on complex litigation. Mr. Rizzo currently interns at Miller & Chevalier’s anticorruption team in Washington, DC. 

The Brazilian Federal Prosecutor’s Office (“MPF”) is one of the authorities in charge of enforcing the set of Brazilian laws combatting corruption. The MPF, along with the Federal Police and the Brazilian Judiciary, has played a key role in investigating, prosecuting and judging cases related to individuals and companies allegedly involved in a massive kickback scheme with the giant Brazilian state owned company Petroleo Brasileiro S.A. (“Petrobras”), also known as “Car Wash.” Now that the investigation has been underway for several months, certain relevant numbers are now emerging which highlight the size and extent of the matter.

A Summary of the Case

From 2004 to 2014, some of the largest Brazilian companies, said to be organized in cartels, allegedly paid bribes to high profile Petrobras officials and other public officials in exchange for billions of dollars in contracts with Petrobras. The amount of the bribes supposedly varied from 1% to up to 5% of the amount of overpriced contracts.

Some of the bribes were purportedly distributed through intermediaries to finance the campaigns of the coalition in charge of the Federal Government since 2003 (PT, PMDB and PP).

The MPF appears to be drawing its enforcement techniques, in part, from the enforcement practices of the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). One of the leading prosecutors in the Car Wash probe, Deltan Dallagnol, obtained his Master’s Degree from Harvard Law School a few years ago. When considering the numbers below, it appears that U.S. authorities might be able to learn something from the case as well.

Individuals Investigated and Charged

Information available on the MPF’s website, recently updated on November 12, 2015, indicates that 173 individuals have been charged so far for roles they allegedly played in the kickback scheme with Petrobras. This number is expected to continue to increase as the investigation unfolds. Another noteworthy number disclosed by the MPF is that there were 75 convictions up to mid-November 2015. The sum of jail time related to these convictions reaches 626 years, 5 months and 15 days.

It is interesting to compare these statistics with similar ones in the United States. Miller Chevalier’s FCPA Autumn Review 2015 reports that this year, through October 2015, there have been only 8 individuals charged with FCPA violations (6 by the DOJ and 2 by the SEC). At the same time, there appears to be an enforcement emphasis on individual prosecutions. In September 2015, DOJ Deputy Attorney General Sally Yates delivered a speech and released a memo called “Individual Accountability for Corporate Wrongdoing,” known as the “Yates Memo”. In short, the Yates Memo highlights an increased focus at the DOJ on the enforcement of the FCPA against individuals.

Other Numbers

Other relevant numbers include the following:

  • The MPF is focused on enforcing Brazilian laws against companies involved in corrupt practices that appear to have harmed Petrobras. The MPF disclosed that 5 civil lawsuits have been filed against 13 companies (and 24 individuals), seeking indemnification in the amount of BRL 4.47 billion (USD 1.2 billion). The total amount sought amounts to BRL 14.5 billion (USD 3.85 billion).
  • MPF reports that bribe payments in the amount of BRL 6.4 billion (USD 1.7 billion) and BRL 1.8 billion (USD 480 million) have already been recovered by Brazilian Authorities through plea bargaining agreements and leniency agreements reached with individuals and companies, respectively.
  • A November 2015 Global Investigation Review article provides that there are around 285 foreign companies known to have done business with Petrobras officials or agents who are under investigation in the Petrobras scandal, and out of those 285, 30 are currently under investigation by Brazilian Authorities.
  • According to the MPF, up to November 2015 there were 85 requests for international cooperation involving 37 different countries, with some US companies allegedly involved in corrupt practices with Petrobras.

When putting into practice the Yates Memo and other priorities, US enforcers might seek to understand how Brazilian authorities have been so successful at prosecuting individuals and companies so far. In that past, non-US authorities had always sought guidance from the US on enforcement. Perhaps there is now room for guidance to be sought in the other direction.

The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.

© 2015 FCPAméricas, LLC

Post authored by Guest

Categories: Brazil, Energy Sector, Enforcement, English, FCPA, State-Owned Enterprises

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