Brazilian police arrested Odebrecht President and Chief Executive Officer Marcelo Odebrecht with accusations of bribery and corruption in connection with a scandal currently engulfing Brazilian national Petrobras, on Friday, according to news reports.
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Marcelo Odebrecht. Image from Odebrecht. |
“Construtora Norberto Odebrecht (CNO) confirms the operation of the Federal Police at its offices in São Paulo and Rio de Janeiro, for the fulfillment of search and seizure warrants. Similarly, some arrest and coercive conduct warrants have been issued. As is public knowledge, CNO believes that these warrants are unnecessary, since the company and its executives have always been available to the authorities to cooperate with the investigation since the beginning of the operation Lava Jato (Car Wash),” Odebrecht said in a statement on its website.
Along with Odebrecht, Andrade Gutierrez President Otavio Azevedo, and 10 others were arrested in connection with charges that their companies paid US$230 million (710 million reais) in bribe money to politicians.
“We have material proof that they knew about the practice of overbilling contracts with Petrobras and they participated directly in the division of contracts within the cartel,” said police investigator, Igor Romário de Paula, in a news conference on Friday, according to the New York Times.
Including Odebrecht, federal police are investigating at least nine of Brazil's largest construction firms: Camargo Correa, OAS, UTC, Mendes Junior, Engevix, Queiroz Galvao, Iesa and Galvao Engenharia.
Odebrecht’s arrest nearly coincides with the one-year anniversary of the death of his grandfather and founder of the company, Norberto Odebrecht, who died of heart failure in July 2014.
The Petrobras scandal
According to the law firm, Mayer Brown, Petrobras has taken a $2.1 billion writedown and a $14.8 billion impairment charge on its financial statements to date. Financial firm Morgan Stanley estimated the Petrobras financial writedown could be as much as $8.1 billion, and UBS estimated the damage to be between $10-15 billion.
Petrobras’ Car Wash scandal, consisting of large-scale bribery of government officials and money-laundering corruption, was first revealed in 2009.
Five years later, in 2014, directors of the Brazilian state run oil company had been accused of taking bribes from construction companies and funneling the funds to parties of the ruling coalition.
Since then, Brazilian police have raided across six states in the country to arrest people connected to the scandal, including former Petrobras Service Director Renato Duque, in addition to 19 presidents and executives of some of the country's largest construction and engineering firms that were accused of forming a cartel to drive up prices of Petrobras’ major infrastructure projects.
Former Petrobras Director Paulo Roberto Costa confessed that politicians received a 3% commission on contracts signed during his reign from 2004-2012. Costa was convicted in April 2015 of money laundering and racketeering, but will only serve one year of house arrest.
Black-market currency dealer, Alberto Youssef, also confessed to his participation to laundering bribe money and was sentenced around the same time as Costa, to nine years and two months in prison. However, he received a reduced three-year sentence after he confessed in a plea bargain.
In February, Petrobras CEO Maria das Gracas Foster, who had been with the company for 30 years, and five directors of the company stepped down from their posts following months of scandals. The company’s board picked Banco do Brasil CEO Aldemir Bendine to replace das Gracas Silva Foster days later.
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