The Department of Justice (DOJ) recently issued a press release to announce that Odebrecht S.A. (Odebrecht), a Brazilian holding company, and its affiliate petrochemical unit, Braskem S.A. (Braskem), have agreed to pay at least $3.5 billion to authorities in the US, Brazil, and Switzerland for violating each country's anti-bribery and corruption laws, including the US Foreign Corrupt Practices Act (FCPA). The Securities and Exchange Commission (SEC) released a separate press release announcing this resolution. This is the largest-ever global foreign bribery resolution.

The DOJ filed a criminal information against Odebrecht and a separate criminal information against Braskem alleging that beginning in 2001, the companies used a sophisticated and complex network of shell companies, off-book transactions, and off-shore bank accounts to bribe government officials around the world for business and preferential benefits. The SEC also filed a civil complaint against Braskem, which is publicly traded on the New York Stock Exchange.

As part of their massive bribery scheme:

The DOJ estimated that this illegal conduct resulted in:

Odebrecht indirectly owned 38.1% of Braskem's total shares and controlled Braskem through its ownership of 50.11% of the voting shares.

As part of its plea agreement, Odebrecht agreed to a criminal fine of $4.5 billion, subject to further analysis of the company's ability to pay the total global penalties. In related proceedings, Odebrecht also settled with the Ministerio Publico Federal in Brazil and the Office of the Attorney General in Switzerland. Under the agreement, the US will credit the amount that Odebrecht pays to Brazil and Switzerland over the full term of their respective agreements. The US and Switzerland will each receive 10% of the principal of the total criminal fine and Brazil will receive the remaining 80%.

Odebrecht has represented it is able to pay only approximately $2.6 billion over the course of its respective agreements with the US, Brazil, and Switzerland.

Odebrecht's criminal fine reflects a 25% reduction off the bottom of the US Sentencing Guidelines fine range because of the company's full cooperation with the DOJ's investigation.

Braskem entered into various plea agreements with US, Brazilian, and Swiss authorities and agreed to pay a total of $957 million in fines and penalties, including:

Braskem's criminal penalty reflects a 15% reduction off the bottom of the US Sentencing Guidelines as a result of its partial cooperation with the DOJ's investigation.

Under their respective plea agreements, both Odebrecht and Braskem also agreed to:

The size of this global resolution is unprecedented. While most bribery or corruption schemes are not as widespread or egregious as the one in this case, companies should take note of this resolution not only because of its record size. The plea agreements demonstrate that the DOJ and SEC will partner not only together and with other US authorities, but also with foreign governments to aggressively identify and punish corruption schemes.

Companies should carefully review their internal policies and procedures to ensure that all employees, officers, agents, and third parties acting on their behalf are aware of and follow the FCPA's anti-bribery and accounting requirements.

For more information on the FCPA, see Practice Note, The Foreign Corrupt Practices Act: Overview and Legal Update, New FCPA Guidance Released by the DOJ and SEC.

For more information on drafting internal FCPA policies, see Standard Documents, Foreign Corrupt Practices Act Anti-Corruption Policy and Policy for the Use of Third-Party Agents Outside of the United States.

In a sentencing memorandum filed with the court on April 11, 2017, the DOJ determined that Odebrecht is unable to pay the assessed criminal fine of $2.6 billion on the pay schedule originally agreed to in the plea agreement. The DOJ is therefore reducing the amount Odebrecht must pay to the US.

The memorandum indicates that the DOJ originally expected to receive approximately $117 million from Odebrecht. However, Odebrecht will instead pay the US $93 million before June 30, 2017. The fines to Brazil and Switzerland may also be reduced based on the company's ability to pay, as governed by Odebrecht's agreements with those countries.