Brazil petrochemical giant Braskem SA said Monday it has started discussions with the DOJ and SEC that could “lead to formal settlement negotiations and the resolution” of allegations that it paid bribes in exchange for supply contracts from state oil company Petrobras.
Braskem said it also “intends to start simultaneous discussions in Brazil with the same purpose.”
Petrobras and Brazil construction firm Odebrecht SA together control about 97 percent of Braskem’s voting stock and about 74 percent of its share capital.
A long-running probe by Brazil prosecutors into corruption at Petrobras has implicated scores of big companies and dozens of executives and politicians.
Last month, former Brazilian president Luiz Inacio Lula da Silva was charged with spearheading a bribery and kickback scheme tied to Petrobras contracts.
Earlier this yaar, in another case linked to Petrobras, the CEO of Odebrecht SA — Marcelo Odebrecht — was sentenced to 19 years in prison for money laundering, corruption, and taking part in a criminal association.
In April 2015, São Paulo-based Braskem said it and two former executives were accused of making improper payments for Petrobras raw material supply contracts from 2006 to 2012.
The allegations appeared in lawsuits filed by third parties, the company said.
Braskem is Latin America’s biggest petrochemical producer. Annual revenue last year was about $22.5 billion. It has about 8,000 employees worldwide at 36 production facilities, including five in the United States.
Braskem SA trades on the NYSE under the symbol BAK.
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Here’s Braskem’s October 3, 2016 statement:
Braskem S.A. (“Company”), in compliance with the provision of CVM Ruling 358/02, informs its shareholders and the market that, within the process of the independent internal investigation that began in March 2015, it has started discussions with the U.S. Department of Justice — DoJ and the U.S. Securities and Exchange Commission — SEC, that the Company hopes will lead to formal settlement negotiations and the resolution of the allegations of misconduct. In addition to the conversations with DoJ and SEC, the Company intends to start simultaneous discussions in Brazil with the same purpose.
The discussions are being conducted by the Executive Officers of the Company, and the rules of the bylaws must be observed regarding the resolution on any proposal of settlement which may be negotiated. Moreover, the independent investigators, in cooperation with the competent authorities, shall continue to investigate with the purpose of verifying the accusations of misconduct object of the potential settlement.
The Company believes that any possible settlement with the authorities may result in relevant monetary obligations, in addition to other possible sanctions and/or non-monetary obligations. Due to the nature of this kind of negotiation, it is not possible to estimate its duration or its final result.
Braskem reaffirms its commitment with the clarification of the facts and will keep the market informed on the relevant developments.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.