Tuesday, October 20, 2020

Odebrecht Fails to Pay Corruption Fine in the Dominican Republic

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Odebrecht S.A. failed to pay the third installment of a corruption fine imposed by the Attorney General’s Office of the Dominican Republic.

Under the leniency agreement signed in 2017, the company was expected to pay the country US$180 million, double what it spent on bribes between 2001 and 2014 to obtain public works contracts.

Due to the agreement and the commitment to pay the fine, the Dominican Republic suspended criminal actions against the company, its subsidiaries, shareholders and directors.

Since the company did not pay the third installment of US $32 million, which was due in July, the Dominican Republic said in a petition filed with the São Paulo Court that it could reopen the lawsuits.

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Odebrecht S.A stopped the payments because it opted to include the Caribbean country on the list of creditors of its holding, known as ODB, and 21 other group companies. This is the largest judicial reorganization in Brazilian corporate history.

The judicial reorganization mechanism is triggered when the company cannot pay its debts and tries to avoid bankruptcy. Odebrecht S.A. has liabilities of about R$ 98.5 billion.

In the request for recovery, the court suspends for 180 days actions and executions. The company then has to present a payment plan to be reviewed by the creditors meeting. If the proposal is not accepted, bankruptcy is declared.

The Dominican Republic was the only country corruption included in the judicial recovery because the leniency agreement was sealed with the ODB holding company. In the others – Panama, Ecuador, Peru, and Guatemala – the contracts were signed with OEC, the construction, and engineering arm of the group.

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