Former Braskem CEO Pleads Guilty to Bribery

19.04.2021 - Former Braskem CEO José Carlos Grubisich has pleaded guilty in a US court to conspiring to violate the anti-bribery provisions of the US Foreign Corrupt Practices Act (FCPA) as well as provisions of that act by failing to accurately certify the Brazilian chemical producer’s financial reports.

The charges brought by the US Justice Department are tied to Brazil’s Operation Car Wash corruption scandal and cover the period from roughly 2002 to 2014, when Braskem’s American Depositary Receipts were publicly traded on the New York Stock Exchange. The financial statements in question pertained to 2006 and 2007.

Over the 12-year period, Grubisich alternately had roles at Braskem and construction conglomerate Odebrecht, one of the chemical producer’s two major shareholders, which still holds a majority of its voting shares. The second major shareholder is Brazilian state-owned energy group Petrobras, which was also implicated in the scandal.

The former CEO was arrested at New York’s Kennedy airport in December 2019 and subsequently arraigned, initially pleading not guilty. The current case is being heard by a federal court in Brooklyn, New York. Under the plea agreement, the Brazilian national, who is free on bail, has agreed to forfeit $2.2 million. Sentencing is scheduled for August this year, and Grubisich faces a maximum sentence of 10 years.

On top of violating US financial laws, the US accuses the executive of working together with co-conspirators to divert $250 million from Braskem to secret offshore shell firms to pay bribes to government officials and political parties in Brazil to obtain and retain business.

One of the bribes is said to be related to a polypropylene plant the chemical company wanted to build. It is not clear whether this was a US project. Braskem, which bought Dow Chemical’s activities in 2011, is the largest producer of PP in North America. According to the court report, Grubisich admitted to paying bribes to an unnamed official at Petrobras, following a 2005 contract with Braskem to operate a PP plant.

In 2016, Braskem and Odebrecht agreed to pay a combined penalty of at least $3.5 billion to authorities in the US, Brazil and Switzerland to settle bribery charges. Odebrecht was suspected of making the illicit payments from bank accounts in New York City and holding secret meetings in Miami. Both companies pleaded guilty to conspiring to violate the anti-bribery provision of the FCPA; Braskem settled separately with the US Securities and Exchange Commission. 

As part of its own September 2018 deal with US authorities, Petrobras agreed to pay an $853.2 million fine to resolve charges that its former executives and directors violated the country’s anti-corruption laws by paying and seeking to conceal bribes. 

Both Odebrecht and Petrobras are in the process of divesting their shares in Braskem. Earlier this month, Odebrecht, which as part of its restructuring in December 2020 changed its name to Novonor, said it was accepting bids for its 38.3% stake that carries 50.1% voting rights. Some analysts suggested that talks with LyondellBasell might be resumed.

Author: Dede Williams, Freelance Journalist