Distributing Bribe Money

January 10, 2017 OPINION/NEWS

Hedeson Alves

 

By

Ricardo Swire

Globalization created a corporate environment which makes bribery for competitive advantage popular. Payola is a global phenomenon. Often appearances differ from reality, due to the diverse magnitudes and extents of graft.

Recent research, by two Harvard Business School affiliates, found businesses that launched anti-corruption efforts progressed slower than companies that paid bribes, especially in regions where bribery is the expected norm.

On December 21st 2016 a combined investigation by Brazilian, American and Swiss law enforcement shuttered one cross border sophisticated bribery and bid-rigging scam. The US Justice Department’s Foreign Corruption Unit was assigned segments of the probe. Brazilian conglomerate Odebrecht SA and its petrochemical partner Braskem SA’s illegal mega scheme started in 2001 and ran unchallenged for fifteen years.

Odebrecht and Braskem used “cash-stuffed suitcases left at predetermined locations” in concert with a concealed, fully operational, business unit as an unofficial “Department of Bribery.” The unit paid large amounts of cash to corrupt government officials in countries spanning three continents. In 2006 Odebrecht officially baptized its Department of Bribery the “Division of Structured Operations.” The section reports directly to Odebrecht’s top executives.

Division of Structured Operations staff transferred US$788 million linked to one hundred awarded projects. Various government officials and political parties, based in twelve countries, received portions of the cash. Recipients guaranteed provision of public contracts, favorable legislation and special prices on acquired materials, Argentina, Angola, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru and Venezuela were among the benefactors.

Ecuadorian bureaucrats accepted US$33.5 million for US$116 million in contracts. Between 2007 and 2014 Odebrecht’s Division of Structured Operations paid upwards of US$35 million in bribes, knowledgeable the unregistered cash would be given to Argentinian public officials. Panamanian public employees received payola valued more than US$59 million in return for contracts. A senior Panamanian government official, assigned to infrastructure works, a key suspect. Odebrecht generated profits worth over US$175 million from Panamanian contracts. Between 2006 and 2015 Venezuelan officials accepted graft totaled US$98 million.

During the reign of three Peruvian presidents, Odebrecht SA doled out US$29 million in bribes to that country’s officials. December 2016’s multinational law enforcement report informed that Odebrecht’s Division of Structured Operations “utilized an entirely separate and off-book communications system, which allowed members of the Division of Structured Operations to communicate with one another and with outside financial operators and other co-conspirators about the bribes via secure emails and instant messages, using code names and passwords.”

US Department of Justice (DOJ) records stated Odebrecht and Braskem’s bribery scheme was extremely profitable. Senior executives from both companies concealed payola, disguising source and payment via cash remitted through a series of shell companies and offshore bank accounts. Smith & Nash Engineering Company, registered in the British Virgin Islands (BVI), is one Division of Structured Operations’ shell company.

Golac Projects & Construction Corporation, another BVI registered shell company’s bank account, was used to pay Odebrecht’s bribe money to foreign officials. The shell company Arcadex Corporation was incorporated on Caribbean island Belize. It facilitated cash transfers between Odebrecht’s New York and Arcadex Corporation Belize bank accounts. Brazil’s national oil company Petrobras and identified local politicians accepted most of the US$788 million graft, South and Central American countries along with Africa among the recipients.

 

 

 

 

 

 

 

 

Ricardo Swire - Tuck Magazine

Ricardo Swire

Ricardo Swire is the Principal Consultant at R-L-H Security Consultants & Business Support Services and writes on a number of important issues.

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