Wednesday, October 21, 2020

Ex-CEO of Petrochemical Giant Braskem arrested on $250 Million Corruption Charges

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The former chief executive officer of Braskem SA, Brazil’s largest petrochemicals company, was arrested on corruption charges and accused of taking part in a 12-year, $250 million bribery plot the U.S. said also involved Braskem’s parent company, Odebrecht SA.

Jose Carlos Grubisich, who prosecutors say pocketed $2.6 million for himself, was charged with conspiracy in a three-count indictment unsealed Wednesday. Odebrecht, a global construction conglomerate that’s also based in Brazil, holds a controlling stake in Braskem.

The two companies in 2016 pleaded guilty to conspiracy to violate anti-bribery provisions of the U.S. Foreign Corrupt Practices Act and agreed to pay $3.5 billion to resolve a massive bribery case brought by the U.S., Brazil and Switzerland.

Grubisich, who was arrested Wednesday at John F. Kennedy airport in New York, entered a not guilty plea in federal court in Brooklyn, New York. Prosecutors said they would ask for Grubisich to be held without bail at a hearing later this week, saying he poses an “extraordinary” flight risk.

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Grubisich is accused of helping divert about $250 million from Braskem to a hidden business unit, called the Division of Structured Operations, that Odebrecht used as a “stand alone bribe department.” The unit was used to funnel payments to corrupt government officials to obtain and retain business, federal prosecutors in the office of U.S. Attorney Richard Donoghue said.

The U.S. alleges that Grubisich and his conspirators agreed to pay millions of dollars to, or for the benefit of, government officials, political parties and others in Brazil to “gain an improper advantage” for Braskem and Odebrecht. Grubisich and others created the “Caixa 2 slush fund” to make the corrupt payments on Braskem’s behalf, according to prosecutors.

The former CEO approved bribe negotiations and payments that were later made by the Odebrecht unit to an unidentified foreign official to keep a contract for a “significant petrochemical project in Brazil” for Braskem, according to the indictment, and to ensure favorable pricing in contract negotiations.

Braskem replaced Grubisich in July 2008. He served as CEO of ETH Bioenergia SA, Odebrecht’s ethanol business, between 2008 and 2012, and then as a consultant for the company between 2012 and 2015.

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