In the post-WW1 recovery period, Emílio Odebrecht, the son of a German immigrant Emil Odebrecht, started a construction firm specializing in reinforced concrete application in Brazil.[1]
In 1944, the business was rebranded by his son, Norberto as Construtora Norberto Odebrecht S.A, focusing on local projects in the Salvador, Bahia.[1]
In the early 1950s, Odebrecht starts expanding locally by building hydroelectric power plants and oil pipelines for the state-owned giant Petrobras.[2]
Odebrecht's first major contract outside of Northeastern Brazil was Petrobras' Headquarters in Rio De Janeiro built between 1967-72.[2] Additional major project such as Angra I Thermal Power Plant and Galeão International Airport were also completed during this period.
In 1979, Odebrecht signs its first international contracts in Peru (Charcani V Hydroelectric Plant) and Chile (Diverting Mau Le River to the Colbún Machicura Hydroelectric Plant).[1] In the same year, Odebrecht through its subsidiary, Odebrecht Perfurações Ltda, became the first private Brazillian firm to offer offshore oil well drilling services to Petrobras.[3]
Beginning of a Global Empire (1979 - 1998)
Entry into Africa, LATAM & India
Odebrecht enters Africa in 1984 with hydro projects in Angola, later expanding into sanitation and oil drilling in Gabon, India.[1] During the 80s, they built irrigation dikes (Ecuador, Peru), power plants (Argentina, Mexico and Paraguay) and pulp mills (Chile).[1]
In 1988, they acquired Bento Pedroso Construçoes S.A (Portugal) to secure $1 billion contract to build the Vasco Da Gama Bridge.[1]
In 1991, Odebrecht acquired SLP Engineering Ltd. (UK) to obtain North Sea oil drilling contracts.[1]
Entry into USA
Odebrecht entered the United States in 1991, securing $512 million in public contracts, including the MIA Mover and the Miami International Airport expansion.[4] By 2002, they had completed 40+ projects in the U.S, most notably the $450 million Seven Oaks Dam project [5] and $213 million American Airlines Arena.[6]
By 1994, Odebrecht's foreign projects accounted for $811 million of $2.18 billion in consolidated revenues.[1]
Petrochemicals Overhaul: Formation of Braskem S.A. (1979 - 2002)
The First Moves
In 1979, Odebrecht acquired 33% stake in Petroquisa in Companhia Petroquímica de Camaçari (CPC), a producer of polyvinyl chloride.[1] Additionally in 1980 Petroquisa merged with Companhia Brasileira de Projectos y Obras (CBPO), a major contractor in Brazil. [1]
The holding company Odebrecht S.A was established in 1981 to oversee all subsidiaries. [1]
Corporate Restructuring
Odebrecht Química was established in 1987 to over see Odebrecht's Petrochemical operations, which had a stake in Salgema (sodium chloride), Poliolefinas (polypropylene) and Unipar. Eventually, Odebrecht Química acquired a controlling stake in PPH and Copesul in 1992.[7]
Eventually they create a new subsidiary OPP S.A (Odebrecht Petroquímica S.A), which acquired a controlling stake in Salgema, CPC and Companhia Química de Recôncavo (CQR).[7]
Formation of Braskem
In 1996, they created Trikem S.A (previously Salgema) and Proppet S.A with the help of Mariani Group.[7]
Major acquisition — Copene Petroquímica do Nordeste S.A & Polialden Petroquímica S.A in 2001 with the help of Mariani Group.[7]
Merger of six firms — Copene Petroquímica do Nordeste S.A, Trikem S.A, OPP S.A , Nitrocarbono S.A & Polialden Petroquímica S.A to create Braskem S.A, the leading producer of petrochemicals in Latin America.[7]
The "Brazillionaire" Godfather: Marcelo Odebrecht (1998 - 2015)
Leadership Transition
In 1998, Norberto Odebrecht retired from the position of Chair of Odebrecht S.A. and transferred it to his son, Emílio Alves Odebrecht. [1]
In 2008, Marcelo Odebrecht, son of Emílio Alves Odebrecht, takes over as the CEO. [1]
Bribing Bigger, Bribing Better
In the 2016 plea agreement with the U.S Department of Justice, Odebrecht executives admitted to engaging in bribery schemes starting 2001.[8]
Odebrecht executives also admitted to the creation of 'Division of Structured Operations (DSO)' in 2006, primarily functioning as a bribe department. Responsible for bribing foreign officials, political parties, politicians and election candidates to secure improper advantage in influencing, obtaining and retaining business relations. Odebrecht utilized the 'Drousys' system to encrypt illicit internal and external communications using code-names and passwords whereas the 'MyWebDay' program was used in processing of illegal payment requests and generating spreadsheets to track bribes.[9][8]
During the period of 2001 to 2016, a sum total of approximately $788 million were paid in bribes for over 100 projects in 12 countries ― Argentina, Peru, Colombia, Mexico, Angola, Brazil, Ecuador, Guatemala, Mozambique, Venezuela, Panama and Dominican Republic. Thus, generating profits of $3.336 billion (approx) from contracts obtained using those bribes. [10]
Table 1. Odebrecht Division of Structured Operation (DSO) Returns: Bribery v Profit by Country (2001-2016) [9]
Country
Bribes Paid (in millions USD)
Profit Generate/Expense Avoided (in millions USD)
Ratio (%)
Period
Brazil
348
1,900
18.4
2004-2016
Colombia
11
50
22.0
2009-2014
Mexico
10.5
39
26.9
2010-2014
Domincan Republic
92
163
56.4
2001-2014
Ecuador
33.5
116
28.9
2007-2016
Panama
59
175
33.7
2010-2014
Argentina
35
278
12.6
2007-2014
Peru
29
143
20.3
2005-2014
Guatemala
18
34
52.9
2013-2015
Angola
50
262
19.1
2006-2013
Mozambique
0.9
n/a
n/a
2011-2014
Venezuela
98
n/a
n/a
2006-2015
Total
785.9
3,160
24.3
2001-2016
Note: Any discrepancy in numbers arise due to the fact that not all transactions are recorded. Only confirmed bribe amounts are made available. Additionally, there could be missing country level values which are subject to change as well. The value of $788 million bribery confession and $3.336 billion associated profit is directly based on the 'plea deal'.
Offshore Accounts
Offshore entities and doleiros (black market currency dealers) were used to conceal and disguise improper transactions. DSO primarily relied on Peter Weinzierl and Alexander Waldstein to funnel funds from Odebrecht bank accounts to Meinl Bank AG in Austria. Weinzierl and Waldstein are Austrian citizens who were on the board of directors of an unnamed subsidiary bank in Antigua and Barbuda. The conspirators were influential in evading upwards of $100 million tax liability for Odebrecht, thus defrauding the Brazilian Tax Authorities.[11] Additionally, using "sham back-to-back transactions" they were able to launder $170 million to offshore Odebrecht bank accounts.[11]
Indicted on September 18, 2020, Peter Wienzierl was arrested in the U.K and is currently in custody whereas Alexander Waldstein is still at large. The case is currently ongoing. [11]
Unaffiliated shell companies such as Smith&Nash Engineering Company (British Virgin Islands), Arcadex Corporation (Belize) and Golac Projects and Construction Corporation (British Virgin Islands) had at least one offshore bank account which were used to make direct and or indirect bribe payments to officials. Multiple transfers between various offshore bank accounts were recorded. [9]
Paulo Costa: The "Henry Hill" of Operation Car Wash
March 20, 2014
Paulo Roberto Costa was arrested by Federal Law Enforcement. The investigation started based on email communication found between Costa and Alberto Youssef, famously dubbed as Brazil's "black market central banker" by Bloomberg. [12] The incriminating piece of evidence was a 'gift' a Range Rover Evoque, given by Youssef to Costa, the former head of Supply and Refining Department at state-owned oil giant, Petrobras.[13]
However, the roots of this investigation lies in the name "Car Wash". Hermes Freitas Magnus, a 44-year-old unsuspecting businessman who in 2008 reported financial transactions made by his investors Alberto Youssef (convicted black market currency dealer) and José Mohamed Janene (a former politician) to launder money through his electronics manufacturing firm to aid the Mensalão scandal (vote buying scheme perpetrated by the ruling Worker's Party in 2003 - 2005).[14]
This led to to a Joint Task Force investigating a gas station posing as a money laundering front, 'Posto da Torre' in Brasília. In March 2014, Paulo Roberta Costa and Alberto Youssef were arrested leading to a chain of discoveries, today known as the Petrobras Scandal.[15]
The Fall of Odebrecht: Largest Corruption Scandal in History (2016 - Present Day)
On March 16 2016, Marcelo Odebrecht was sentenced to 19 years in prison for paying more than $30 million in illicit donations to Dilma Roussef and Michel Temer. [16][17]
Marcelo's sentence was later reduced to 10 years and his remaining sentence was changed to a house arrest following a plea deal. [18]
On December 21, 2017 Odebrecht S.A pleads guilty to conspiracy to violate the Foreign Corrupt Practices Act and agrees to pay $2.6 billion divided amongst USA (10%), Brazil (80%) and Switzerland (10%).[10]
Initially, Odebrecht owed $260 million with accrued interest by June, 2017 to the US. On April 11, 2017, due to an inability to pay the fine, further negotiation resulted in a final amount of $93 million being owed to the US.[10]
Odebrecht S.A indirectly owned 38.1% of total shares of Braskem S.A and 50.11% of voting shares. Whereas, Petrobras owned 36.1% of Braskem S.A. With the help of DSO, Braskem paid $250 million to offshore accounts of which $75 million was used to make bribes to Brazilian officials. Thus, resulting in a profit of $289 million.[19]
The Department of Justice indicted Jose Carlos Grubisich on February 27, 2019, who served as CEO of Braskem (2002 - 2008) and as a member on the Board of Directors (2010 - 2012). After pleading guilty on April 15, 2021, he was ordered to forfeit $2 million and sentenced to 20 months in prison plus 1 year of supervised release and an additional $1 million on October 12, 2021. [20]
Key Players
Within Odebrecht: The King Pins
Marcelo Bahia Odebrecht: CEO
Marcelo Odebrecht upon his sentencing
As CEO of Odebrecht Marcelo oversaw and signed off on most of the bribes making him most responsible for the Odebrecht Scandal and its fallout. In 2014, Marcelo ordered to conceal the bribery operations by moving the Department of Structured Operations (the Bribery department) to the Dominican Republic.[21] By March of 2016 Marcelo was sentenced to 19 years for paying more than $30 million in bribes to Petrobas executives and politicans.[22] He was held in the southern Brazilian city of Curitiba where Operation Car Wash was based for 2 and half years before his release.[23] The exact sum of his penalties is not known, but assumed to be in the millions.
Under Brazilian law, inmates are entitled to Delação premiada literally meaning "rewarded whistle-blowing". While in prison Marcelo worked with the Brazilian Federal Prosecutor's Office to come to an agreement in exchange for information. Marcelo's statements led to 84 former and current politicians to be surveilled and questioned.[24] As part of the plea deal, Marcelo was released from jail and served the remainder of his time under house arrest in his São Paulo home.[18] Alongside Marcelo, 77 other Odebrecht executives and employees signed similar plea deals.[23]
His charges and conviction proves he was not only aware but an active participant in the bribes and scandal. He grew Odebrecht's sum of bribes larger and larger, ordered the move of the bribes department in an attempt to conceal, and was warned that the bribes were getting out of control but chose not to stop. Marcelo can not play ignorance making him the most important player for the creation and downfall of Odebrecht's bribes.
Hilberto Mascarenhas Alves da Silva Filho: Head of Department of Structured Operations
Hilberto Filho
As head of the Bribery Department Hilberto was the mastermind of the day to day operations. Since 2009, Hilberto repeatedly expressed concerns to Marcelo Odebrecht that the bribery scheme was "growing brutally" and it was "financial suicide, suicide risk, suicide of security, suicide of everything" to continue.[25] Hilberto paid a critical role in the adaptation and use of MyWebDay, the internal accounting software (based on the official system of the Brazilian Federal Treasury) to track which payments were going to whom and for which projects.[26] He also created the Drousys system, a secure communication platform of email and messages.[26] In 2016, countless encryption keys allowing access to MyWebDay and Drousys were destroyed resulting in significant evidence losses.[9]
Politicians: From Ballots to Bribes
Michel Temer: 37th President of Brazil (August 2016-January 2019)
The Operation Car Wash plea deals (most notably Marcelo's) were happening during his presidency. At the time Former President Temer inherited a severe economic crisis upon his inauguration. Many critics argued he overplayed the severity to distract from his involvement in Operation Car Wash[27].
President Silva's Official Portrait
Luiz Inácio Lula da Silva: 35th & 39th President of Brazil
In July, 2017, then Former President Silva was sentenced to 9 years in prison for corruption for illegally accepting $1.1 million in illegal bribes from Odebrecht in exchange for Petrobas contracts.[28] Silva's political party the Workers' Party received a total of $10 million from Odebrecht to support then leader and president Dilma Rouseff.[28] Part of his sentence included a stipulation he was not to run for President for another 19 years (expiring in 2036).[28]
Silva declared his innocence multiple times, calling the charges against him a "farce".[29] Silva's lawyers have claimed Judge Sergio Moro was biased against him and that this was a move to prevent his return to power and not a democratic decision[30].
In January, 2018, the Brazilian appeals court unanimously upheld Silva's charges and increased his sentence from 9 years to 12 years.[31]
In late 2019, Brazil's Supreme Court annulled all of Silva's conviction because the Brazilian state in which the convection accrued was not the state where the accused crimes occurred in.[31] Seven of eleven justices agreed with this ruling and reasoning thus removing all charges and allowing President Silva to run for his third nonconsecutive term.[31] Silva served a total of 580 days behind bars[32].
The Face of Operation Car Wash
Sergio Moro
Sergio Fernando Moro: 13th Federal Judge
In 2004, Moro wrote a famous article praising Mani Pulite in taking action against Italian corruption.[33] Showing his long standing desire to change and reform Brazil away from corruption.[33] As lead judge of Operation Car Wash he oversaw all action related to the corruption case. He issued search and seizure warrants, preventative detentions, and plea bargains to make Operation Car Wash what it was known for. He achieved a hero status for his work and role amongst the Brazilian people.[34]
In 2018, Moro accepted a position to become Minister of Justice under the 38th President of Brazil Bolsonaro.[35] This decision disappointed countless supporters, and gave ammunition to his opposition that Operation Car Wash was politically charged rather than anti-corruption based.[33] Putting Moro's character and intentions into question.
In 2019, Telegram messages of Brazilian prosecutors were hacked and released.[34] Part of this leak showed that Moro colluded with the prosecution against Silva proving he was biased in his ruling.[34]
In 2021, the Supreme Court officially ruled that Moro was biased in the Silva case ruling.[35]
Key Stakeholders
Employees
From construction crews to office staff, Odebrecht employees were a key part of the company's operations but not largely decision makers in the bribery scheme.
Most employees were unaware, except the few in in the secret "Division of Structured Operations", that helped facilitate bribes.
Massive layoffs occurred because of the scandal - about 50,000 employees in 2016 alone. Companies involved in Operation Car Wash resulted in a loss of over 100,000 jobs, affecting many uninvolved workers.[36]
Increased company-wide ethics training and the expansion its compliance department brought stricter oversight and new protocols. The purpose behind this was to rebuild trust and protect employees from future misconduct.[1]
Managers and Executives
Odebrecht's senior managers and executives were the driving force behind the corruption scandal. Empowered with significant operational autonomy, they orchestrated the bribery scheme to secure illegal advantages.
Starting in the mid 2000's, top executives established the "Division of Structured Operations" specifically for managing bribes and off-the-books transactions[1]. This unit utilized a secure communication system called Drousys, employing code names and encryption to organize illicit payments[37]. Reporting directly to the highest levels of the company, this demonstrates that corruption was embedded within Odebrecht's leadership structure.
Following the scandal, many executives were prosecuted. CEO Marcelo Odebrecht was arrested in 2015 and sentenced to 19 years in prison in 2016 for corruption.[37] In total, 77 executives made plea deals, offering confessions for reduced sentences.[1] By late 2016, 51 were fired, and 26 were demoted from leadership.[1]
The scandal destroyed the careers of many executives, leading to jail time or industry bans. Odebrecht's leadership was rebuilt under strict compliance.[1] The case became a significant warning about the personal consequences of corporate corruption in Latin America.
Board of Directors
Composed predominantly of family members and insiders, Odebrecht's Board of Directors held the responsibility for corporate oversight. However, their failure to identify or impede the bribery scheme brought into question their accountability and adherence to sound governance principles.
Although direct involvement in the bribery is not substantiated, the board's weak internal controls and possible deliberate ignorance facilitated the scheme's ability to thrive. Critics highlighted the lack of autonomous audits and the dominance of family members as key weaknesses in the company's governance structure.[1]
Following the scandal, Odebrecht undertook a restructuring of its board to meet the requirement of leniency arrangements. Chairman Emílio Odebrecht stepped down in 2018, and the company committed to removing all family members from leadership roles. [1] Revised bylaws stipulated that a minimum of 20% of board seats be held by independent directors, aiming to secure unbiased oversight[1]. The board's responsibilities were redefined to concentrate on high-level strategic planning rather than operational engagement.[1]
From 2017 onward, Odebrecht was placed under strict external monitoring by the Brazilian Attorney General's Office and the U.S. Department of Justice, including the supervision of board functions[1]. Monitors conducted audits of the company's operations and ensured compliance with anti-corruption standards. The board was required to fully cooperate, reinforcing a commitment to ethical practices under the risk of losing leniency agreements.[1]
Government and Regulatory Authorities
Government entities acted as both recipients of services and participants in Odebrecht's bribery scheme. The company paid approximately $778 million to officials across 12 countries to win public contracts.[38] Following the scandal, regulators and law enforcement became crucial in investigating and prosecuting the misconduct.
Officials at all levels were implicated, including presidents, minsters, and state firm executives.[37] In Peru, all four presidents from 2001-2008 were tied to the scandal.[37] Similar allegations arose in Mexico, Columbia, Venezuela, and beyond.[39]
The scandal triggered political crises and prompted significant reforms. In Brazil, it fueled widespread public unrest and contributed to the impeachment of President Dilma Rousseff.[36] Countries like Peru established dedicated anti-corruption teams and implemented more robust legal frameworks.[1]
Notwithstanding the considerable reputational harm, the case served as a catalyst for improvements in governance. Nations strengthened anti-corruption bodies, refined procurement procedures, and increased regional cooperation. While the degree of progress varied, the scandal marked a transition towards enhanced accountability in many countries.
Shareholders and Investors
Investors included the founding family, minority shareholders, bondholders, and banks - all of whom had a financial stake in the success of the company.
The majority of investors were likely oblivious that Odebrecht's expansion was underpinned by systemic bribery. However, the controlling family and internal stakeholders probably accrued direct benefits.
Odebrecht experienced a loss of credit access, its bonds were downgraded, and in 2019, it filed for bankruptcy to restructure $13 billion in debt.[40] The company's total liabilities approached $25 billion, shareholders suffered considerable losses.
Investors in the U.S. initiated class-action lawsuits, alleging that Braskem (subsidiary on the NYSE) concealed its bribery schemes and artificially inflated stock prices.[38]
As part of leniency agreements, Odebrecht implemented reforms in governance and compliance. While intending to restore investor confidence, many institutions had already divested their holding. The case prompted increased investor vigilance regarding corruption risks in sectors with high exposure to such practices.[1]
Clients and Business Partners
Clientele consisted of mainly public-sector organizations and state owned enterprises commissioning infrastructure projects. It's business partners encompassed joint venture collaborators, subcontractors, suppliers, and financial institutions.
Honest clients were inadvertently disadvantaged by inflated bids, while certain business partners were either complicit in or unaware of Odebrecht's corrupt methodologies.[38] Following the scandal's emergence, governments suspended projects and terminated contracts. Peru rescinded a $7 billion gas pipeline agreement and imposed a $262 million fine on Odebrecht.
Odebrecht's partners experienced reputational damage. Peru's Grana y Montero, for instance, was subject to investigation due to its association with Odebrecht.[41] This rendered the company a high-risk partner, prompting many firms to sever their connections.
Trust rapidly diminished. Peru's president publicly declared Odebrecht unwelcome.[41] Governments began incorporating anti-corruption stipulation into contracts, while business partners augmented their compliance protocols.
Local Communities / Citizens
Local communities and citizens residing near Odebrecht's project sites were intended to benefit from enhanced infrastructure, employment opportunities, and economic advancement. Although not directly involved in the agreements, they were significantly affected by the resultant outcomes.
The broader economic fallout weakened regional economies, particularly in Brazil, as the construction and oil sectors experienced a slowdown.[38] This led to job losses and project freezes that adversely affected everyday citizens.
On a positive note, the scandal heightened public awareness. Communities and civil society organizations began demanding transparency and accountability in infrastructure planning.
Media and Whistleblowers
Journalists and whistleblowers were instrumental in exposing the Odebrecht scandal. They functions as crucial watchdogs, unveiling the extent of corruption that might have otherwise remained concealed.
The media's persistent reporting prevented Odebrecht from controlling the public narrative. Brazilian news outlets covered initial arrests, and the leaked testimonies of 77 Odebrecht executives in 2016 further illuminated the details of the scheme.[1]
Whistleblower testimony remains critical in ongoing prosecutions. The scandal strengthened investigative journalism in Latin America and emphasized the value of informants in combating impunity.
Competitors
Odebrecht's competitors included prominent Brazilian companies such as Andrade Gutierrez, OAS, NS Camargo Correa, alongside international contractors. While some engaged in legitimate competition, many were part of a cartel orchestrated by Odebrecht, opting for collusion over genuine rivalry. Seven major firms met secretly to divide contracts, submit fake bids, and fix prices.[42]
Ethical firms that had been sidelines by rigged bids were vindicated. Although the market faced short-term disruption, many saw new opportunities as Odebrecht and others exited.
The fallout from Operation Car Wash hit these firms hard. Executives were arrested, companies faced fines , and some were banned from bidding on contracts. For instance, the CEO of OAS was jailed around the same time Marcelo Odebrecht was arrested. [43]
The scandal tarnished the entire industry, even for firms not involved. To rebuild trust, many launched ethics campaigns or rebranded. The scandal purged corrupt players but opened space for transparent competition eventually.
Legal Perspective
Jurisdiction and Legal Framework
Main Violations
Odebrecht violated multiple laws and regulations across several jurisdictions. In Brazil, it breached domestic anti-bribery laws, including the Clean Company Act (2014), which targets corporate liability for corruption[44]. Internationally, it violated the U.S. Foreign Corrupt Practices Act (FCPA) and similar anti-corruption laws in Peru and Columbia. The company engaged in transnational bribery, corporate fraud, and money laundering, violating national and international norms.
Legal Responses Across Countries
In Brazil, Operation Car Wash (Lava Jato) became the primary vehicle for investigation and prosecution, focusing heavily on local political figures and corporate executives[45]. In the U.S., the Department of Justice applied the FCPA, concentrating on the multinational nature of the corruption. Peru and Columbia followed suit with their investigations, leveraging bilateral cooperation with Brazil but facing challenges aligning with local laws and international standards on bribery[46].
Roles of the U.S. Foreign Corrupt Practices Act (FCPA) and International Laws
The U.S. Foreign Corrupt Practices Act (FCPA) was crucial in prosecuting Odebrecht for its involvement in bribing foreign officials. The U.S. settlement highlighted the extraterritorial reach of U.S. anti-bribery laws[44]. Similar laws, such as the UK Bribery Act and Brazil's Clean Company Act, contributed to legal frameworks for accountability[47].
Legal Proceedings and Prosecution Strategies
Main Legal Arguments
Prosecutors focused on the systemic nature of the corruption network involving high-level corporate executives and politicians. The arguments rested on proving that Odebrecht had created a corporate culture around bribery to secure construction contracts across Latin America[45].
Plea Bargains and Leniency
Plea bargains, especially in Brazil, were pivotal in securing cooperation from Odebrecht executives, including the former CEO, Marcelo Odebrecht, who received a reduced sentence for providing information, as mentioned in the previous section. These leniency agreements expedited investigations by enabling access to documents and testimonies, leading to a broader understanding of the corruption network.
Obstacles in Prosecuting Executives and Politicians
Prosecutors faced significant legal obstacles, including political interference in some countries, particularly Brazil, where the political figures involved were highly influential[48]. In addition, jurisdictional issues arose as Odebrecht's operations spanned multiple countries, complicating the prosecution of its executives.
Jurisdictional Challenges
In transnational bribery cases, jurisdictional challenges were pronounced, mainly when multiple countries had competing interests. Brazil's legal actions conflicted with the legal frameworks of other nations, especially when prosecutors sought to recover illicit funds from foreign accounts, leading to complex jurisdictional negotiations.
Role of International Cooperation
Legal Cooperation
International cooperation was vital to the Odebrecht case. Brazil's Lava Jato task force worked closely with the U.S. authorities, leading to coordinated efforts to dismantle the corruption network. Legal cooperation between countries like Brazil, the U.S., and Peru was critical for sharing evidence, gathering testimonies, and coordinating legal actions.
Legal Instruments Used
Mutual Legal Assistance Treaties (MLATs) Facilitated border evidence-sharing[46]. These treaties allowed Brazil to work with the U.S. Department of Justice and other international bodies, enabling the exchange of documents and securing judicial cooperation.
Extradition Issues
Extradition became a critical issue in prosecuting key figures, especially when suspects fled to countries with limited extradition agreements with Brazil[47]. The U.S. and Switzerland were particularly helpful in facilitating the return of fugitive executives.
Legal Accountability and Corporate Liability
Corporate Criminal Liability
Odebrecht was held criminally liable as a corporation, agreeing to substantial financial penalties and compliance reforms as part of plea deals[44]. The company faced fines exceeding $2.6 billion, with the expectation that it would overhaul its internal governance and anti-corruption programs[49].
Consequences for Executives versus the Corporation
Individual executives, including Marcelo Odebrecht, faced prison sentences, while the company faces extensive fines and restrictions. The distinction between personal responsibility and corporate liability highlighted the challenges holding large corporations accountable for systemic corruption.
Shareholders of Subsidiaries
While shareholders were not directly held liable, subsidiaries in other countries were scrutinized. In the U.S., Odebrecht's affiliates, particularly its North American subsidiary, faced significant fines.
Legal and Ethical Implications of Settlements
Proportionality of Settlements
While significant, the $2.6 billion fine was seen by some critics as insufficient given the scale of the corruption, particularly in light of the company's ongoing business operations[45]. Settlements may have allowed Odebrecht to continue operating, thus raising concerns about whether financial penalties were sufficient deterrents.
Plea Deals and Future Precedents
The Odebrecht case set a precedent for corporate corruption prosecutions, particularly regarding leniency agreements. The case reinforced the importance of collaboration between countries and the need for multinational companies to be held accountable through coordinated legal efforts.
Effectiveness of Compliance Reforms
The compliance reforms implemented in settlement agreements were comprehensive, but their long-term effectiveness remains uncertain[49]. Some argue that Odebrecht's internal controls are still not robust enough to prevent future corruption, highlighting concerns about the sustainability of corporate governance reforms[50].
Political and Institutional Impact on Legal Outcomes
Political Interference
Political interference was a significant factor in shaping the legal outcomes in Brazil. The involvement of high-profile political figures complicated the legal process, with some politicians possibly benefitting from the lack of full accountability[45].
Impact on Judicial Independence
The scandal increased scrutiny of Brazil's judicial independence. Media and public pressure played a central role in pushing for greater transparency and accountability, influencing the outcome of key trials and settlements.
Role of the Public and Media
Media coverage and public outcry were crucial in keeping the scandal in the public eye, pushing for transparency and swift legal action. This was particularly true in Brazil, where the media helped expose the depth of the corruption. However, there are allegations that the public attention was often directed and controlled away from the president and onto the companies and their executives, and that when the media discussed the president of Brazil, the rough economic situation of the country had a very heavy, exaggerated influence on the topics, so as to distract from the scandal[45].
Long-Term Legal Reforms and Precedents
Anti-Corruption Reforms
The Odebrecht case strengthened anti-corruption laws in Brazil and other affected countries. Brazil, in particular, introduced more stringent corporate governance laws, making it harder for companies to engage in corrupt practices without facing severe legal consequences[51].
Influence on Corporate Governance
The scandal also reshaped corporate governance globally, Multinational corporations have since faced stricter scrutiny regarding anti-bribery practices and compliance with international laws like FCPA[47].
Ongoing Legal Challenges
While significant settlements have been concluded, ongoing challenges persist, particularly in recovering illicit assets and prosecuting the remaining figured involved in the bribery network. In Peru and Colombia, for example, investigators are still underway to hold local politicians and officials accountable[52].
Where are They Now?
Odebrecht
Logo for Odebrecht's rebrand Novonor After the many lawsuits and scandals Odebrecht had received since 2016, the company is still fully operational with 23,000 employees and a revenue of $15.2 million as of 2020.[53]
In 2019, Odebrecht filled for bankruptcy protection to restructure their $13 billion of debt.[40]
On December 18, 2020, Odebrecht rebranded themselves as "Novonor" to step back from past scandals and showcase the changes made within the company.[54]
Novonor's vision for the next 10 years is "To have confidence of costumers and society to design and implement with ethics innovative solutions to create value for everyone".[55]
Marcelo Bahia Odebrecht
In 2017, Marcelo's sentence sentence reduced to 10 years due to him taking a plea deal and cooperating with authorities by turning in evidence related to "Operation Car Wash".[23]
Marcelo did the remainder of his time under house arrest and doing community service.[23]
In 2023, Marcelo was released from his sentence getting it reduced from 19 years and 4 months to 7 years.[56]
Currently, not much is known about Marcelo's life after finishing his sentence.
Luiz Inácio Lula Da Silva
After being freed from prison, Luiz maintains his innocence but has never been cleared by the court.[31]
In 2023, President Silva was elected as the president of Brazil in a landslide victory over the other candidate Bolsonaro with 75% of the votes.[57]
Seen as a polarizing figure among Brazilian voters. Some consider him the "man of the people", while others criticize him based on his corruption and greed around the Odebrecht case.[58][59]
Michel Temer
In a 2017 poll, 76% of Brazilian thought Michel should resign.[60]
Arrested in 2019 on the basis of corruption, but he denied any wrongdoing.[61]
Spent only 4 days in jail after the judge ruled him as not a risk to public safety.[62]
After his sentence, not much is known about his private life or his activities.
Hilberto Mascarenhas Alves Da Silva Filho
In June 2017, Hilberto was convicted by the Federal Court of Curitiba and was sentenced to 7 years and 6 months behind bars.[63]
In December 2020, the Supreme Court of Justice annulled his conviction on the basis of procedural issues.[64]
Currently, not much is known about Hilberto and what he is doing.
Sergio Fernando Moro
Public opinion of Moro has shifted from being a hero and the "face of anti-corruption", to now being associated with Bolsonaro's far-right presidency during Covid-19.[65]
In 2022, Moro won a senate seat, with his wife being elected as deputy.[35]
Currently, he is facing a trial for election campaign irregularities which could make him lose his senate seat.[35]
Braskem's new CEO Roberto Prisco Paraiso Ramos
Braskem
In 2016, Braskem and Odebrecht had to pay a combined fine of $3.5 billion to resolve charges in Brazil, United States, and Switzerland.[66]
Significant reputational damage resulted in Braskem's share price falling to this day, making it harder for Novonor to sell its stake in Braskem to pay off debts.[67]
In December, 2024, Braskem restructured and transitioned to a new CEO Roberto Prisco Paraiso Ramos to lead in optimizing Braskem's operations and overhaul the governance structure.[68]
Petrobras newest CEO Magda Chambriard attending a conference in Rio de Janeiro, Brazil
Petrobras
In 2015, Petrobras sold $13.7 billion in assets over 2 years due to high debt and to gain financial stability.[69]
In 2018, Petrobras agreed to pay $853 million in fines levied by the Department of Justice and Securities and Exchange Commissions in which 80% was allocated to Brazil, and 10% to Switzerland and America respectively.[70]
Like Braskem, Petrobras underwent a leadership change with Petrobras appointing Magda Chambriard as the new CEO to ensure proper governance within the company.[71]
Declaration of Use of Artificial Intelligence
Timeline
ChatGPT was used for definitions of legal 'jargon' such as disgorgement, indictment, commuted, forfeited etc.
Asked for simple explanations of extensive case papers from FCPA website to aid in understanding of legal case studies. For example, United States v Odebrecht S.A. [9] This greatly helped in deciphering usage of legal language such as "Brazilian Official 5, an individual...." [9]. Additionally, due to lack of names and places, (e.g. "Brazilian Official 5" ) was made faster when information was presented concisely by ChatGPT.
ChatGPT was used to initially extract author, date, publisher, source title etc to aid in creating citations. Realized it was not accurate or reliable, manually finding key details was faster than double checking.
Used ChatGPT to generate a basic outline for Wikipedia page, assisting in creating headings and formalizing structure.
Key Players
ChatGPT was used to generate the initial list of 15 key stakeholders.
The list guided initial google searches (e.g Michel Temer Odebrecht), from each key players new ones were discovered (e.g Hilberto Filho) while other were omitted due to playing a smaller role.
ChatGPT was also used to understand some timeline and overlapping points (e.g when Marcelo's plea deal would have been negotiated and when his release was in relation). ChatGPT was asked to provide sources and those were then verified and used when relevant.
Key Stakeholders
ChatGPT was used as a comparison tool to compare the list of key stakeholders that was self-researched to what the AI would come up with
The AI missed certain key stakeholders like 'regulatory bodies'
AI was also used to help with improving sentence structure and flow
AI was used in the research process to summarize articles and obtain the main points of the article for efficiency
AI was consulted for ideas regarding formatting and section breakdown
Legal Perspective
ChatGPT was used to generate initial questions to keep in mind during research on the legal side of the Odebrecht scandal.
ChatGPT was used to summarize some academic and official papers to determine relevance of the content and determine if the paper might be worth fully reading.
ChatGPT was given a rough draft of the essay to suggest improvements on the papers organization, the breaking up of the paper into sections, and heading names. No suggestions were followed exactly. Only some suggestions, such as the heading names, were considered at all.
ChatGPT was used to provide links for more articles to find and read.
Where Are They Now?
ChatGPT was specifically used to find, give translation and a summary of the sources[63][64]due to them being in Portuguese. This was double checked with Google Translate to get a gist of what each source was saying. This was necessary because the only sources about Hilberto after the Odebrecht Scandal were not in English.
ChatGPT was used to guide research for Petrobras, in which every source given was checked thoroughly to ensure relevancy and accuracy. From this the only source used was source [70]. Cross checked information from this website and found other sources from the BBC and Department of Justice to confirm accuracy.
↑ 44.044.144.2“UNITED STATES OF AMERICA - against- ODEBRECHT S.A., Defendant.” UNITED STATES DISTRICT COURT EASTERN DISTRICT Of NEW YORK, 2016, www.justice.gov/d9/press-releases/attachments/2016/12/21/odebrecht_information.pdf?
↑ 45.045.145.245.345.4Jacopo, Costa. “The Nexus between Corruption and Money Laundering: Deconstructing the Toledo-Odebrecht Network in Peru.” Trends in Organized Crime, vol. 27, no. 3, 22 Jan. 2022, pp. 342–363, doi:10.1007/s12117-021-09439-6.
↑ 46.046.1Pimenta, Raquel De, and Otavio Venturini. “International Cooperation and Negotiated Settlements for Transnational Bribery: A Study of the Odebrecht Case.” Revista Direito GV, vol. 17, no. 2, 2021, doi:10.1590/2317-6172202131.
↑ 47.047.147.2Campos, Nicolás, et al. “The Ways of Corruption in Infrastructure: Lessons from the Odebrecht Case.” Journal of Economic Perspectives, vol. 35, no. 2, 1 May 2021, pp. 171–190, doi:10.1257/jep.35.2.171.
↑“UNITED STATES OF AMERICA - against - JOSE CARLOS GRUBISICH, Defendant.” UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK, 2019, www.justice.gov/criminal/criminal-fraud/file/1297156/dl.
↑ 49.049.1Costa, Ligia Maura. Rebuilding an Empire: The Odebrecht Challenge after the Corruption Scandal, 2020, doi:10.4135/9781529793239.
↑Osland, Asbjørn. The Survival of Odebrecht in Brazil after an International Construction Bribery Scandal, 2020, doi:10.4135/9781529724387.
↑“14th Regional Meeting for Latin America and the Caribbean: The Impact of the Odebrecht Corruption Case.” UNCAC Coalition, 16 May 2014, uncaccoalition.org/14th-regional-meeting-for-latin-america-and-the-caribbean-the-impact-of-the-odebrecht-corruption-case/.
↑Times, Tico. “Panama Trial Begins for Ex President Martinelli in Odebrecht Scandal.” The Tico Times | Costa Rica News | Travel | Real Estate, 20 Jan. 2025, ticotimes.net/2025/01/20/panama-trial-begins-for-ex-president-martinelli-in-odebrecht-scandal
.jpg)
.jpg)
