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Corrupt Brazil Builder Takes Deal

Monday, August 24, 2015

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A Brazilian builder accused of participation in a bribery, price fixing and money laundering scheme has agreed to pay a nearly U.S. $30 million dollar fine as part of a leniency deal.

Camargo Correa SA, one of Brazil’s largest construction companies, announced that it would be cooperating in the ongoing investigation, share documents that would incriminate other companies and reveal how the cartel worked.

Camargo Correa

One of brazil's largest construction companies agreed to pay nearly U.S. $30 million as part of a leniency deal and cooperate fully with the ongoing investigation, according to reports.

Brazilian anti-trust agency Administrative Council for Economic Defense (CADE) disclosed that Camargo Correa would pay a 104 million Brazilian reals (US $29.7 million) fine in exchange for a reduced penalty and assurances that an administrative probe would be dropped, Fox News Latino reported.

The Cartel’s System

According to CADE, the company participated in a scheme to overcharge Brazilian multinational oil company Petroleo Brasileiro (Petrobras) via collusion to inflate the cost of Petrobras contracts.

Participating companies are reported to have overcharged Petrobras for contracts, split the take with certain Petrobras officials and also used it to persuade politicians to “provide cover” for the illegal activity, bringing many executives, politicians and companies under the spotlight.

Law 360, a legal news and analysis site, indicated that to date 40 people have been indicted by the Brazilian federal court, and 50 politicians are under investigation in the scandal. This includes executives from numerous construction companies, as well as the speakers of both houses of legislature in Brazil.

Fox News Latino reported that cartel members Setal Engenharia and SOG Oleo e Gas signed leniency deals with the anti-trust agency earlier this year.

Other construction and engineering firms said to be part of the group include Andrade Gutierrez, Odebrecht, Queiroz Galvão and UTC Engenharia, who are among Brazil’s largest construction and engineering firms.  

The Legal Venue

According to Law 360, this deal comes just a month after three of Camargo Correa’s executives were imprisoned for their part in the ploy.

Camargo Correa

When a company enters into a leniency deal, their fines can by reduced by as much as two-thirds, and they can still bid on government jobs, Reuters reported.

Dalton Avancini, Eduardo Leite and Joao Ricardo Auler were found guilty of bribery and money laundering for their roles in price-fixing and bribery involving contracts at two refineries and the Rio de Janeiro Petrochemical Complex.

Avancini, Camargo's former president, and Leite, its former vice president, were each sentenced to 15 years, in addition to fines.

Auler, former president of the board of directors, got nine years in prison plus a fine.

In that time, two defendants from Petrobras and the Brazilian federal police were also sentenced, and two were acquitted for lack of evidence, according to Brazilian magazine Epoca, Law 360 said.

Alberto Youssef, identified as being at the center of the operation, was fined and will serve eight years in prison. He named current Brazilian President Dilma Rousseff, former Petrobras board chair, as aware of the cartel’s activities as well.

Earlier this year, six Petrobras executives, including former CEO Maria das Gracas Silva Foster, resigned amid the corruption investigations.

Leveraging Leniency Deals

Reuters reported that the Brazilian federal government is hoping leniency deals will lessen the economic impact of the investigation. As the scandal has played out, infrastructure projects have had to be cancelled or paused, suppliers are filing for bankruptcy, and unemployment grows.

According to the news agency, when companies enter these deals, their fines can by reduced by as much as two-thirds, and they are still able to bid on government jobs.

Fines for bribery in Brazil range between 0.1 percent and 20 percent of a company's gross revenue, it said.

   

Tagged categories: Asia Pacific; Business management; Business matters; Business operations; Construction; EMEA (Europe, Middle East and Africa); Latin America; North America; Offshore; Oil and Gas; Petrochemical Plants; Program/Project Management; South America

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