While the U.S. share of Odebrecht's "global" criminal penalty for its December 21 FCPA resolution is not yet known, it's going to be at least $260 million. Its subsidiary, Braskem, agreed to pay the DOJ and SEC $159.8 million for FCPA offenses. If you combine them, their $419.8 million settlement lands fifth on our list of the biggest FCPA cases of all time.
Whether to combine the Odebrecht and Braskem resolutions was always a close call.
We (and most other FCPA watchers) typically combine enforcement actions involving a corporate parent and one or more subsidiaries. Most of the cases on our top ten list involved parent companies and subsidiaries, including Siemens, Alstom, Teva, Och-Ziff, VimpelCom, and Alcoa.
Odebrecht is Brakem's corporate parent. It controls just over half of the voting shares of Braskem and about a third of its capital stock. The charges against the two companies were interrelated -- Braskem used a business unit of Odebrecht to handle its bribery. The DOJ filed the cases at the same time and both companies entered plea agreements on the same day. A single DOJ release covered both companies.
But there were reasons not to combine them. The DOJ treated parent Odebrecht and subsidiary Braskem more like separate enforcement actions than we've seen in past FCPA corporate cases.
For example, Odebrecht and Braskem faced separate criminal charges and entered separate guilty pleas. Each company received separate and very different payment arrangements for their criminal penalties, which themselves were separately calculated. And each company agreed to retain its own independent compliance monitor. Usually in FCPA actions, just one monitor is stipulated for the corporate parent.
The way the DOJ handled Odebrecht and Braskem wasn't typical. That stumped us when it came to whether the actions should be combined or kept separate. At first we decided to keep them separate, based mainly on the unique way the DOJ handled them.
Then we wavered. We started looking back at other parent - subsidiary FCPA actions. Just then one of the FCPA Blog editors came along and nudged us to the other result. As he said, "Since the agencies are breaking new ground with a lot of this stuff, we gotta make up the rules as we go along!"
So we're combining Odebrecht and Braskem, and combined they land fifth on our list of the ten biggest FCPA cases of all time.
Pushed out of the FCPA top ten is Snamprogetti Netherlands B.V. / ENI S.p.A (a Dutch subsidiary and its Italian parent), which together paid $365 million in 2010.
As of now, four of the ten biggest FCPA cases happened in 2016 -- Odebrecht and Braskem, Teva Pharmaceuticals, Och-Ziff, and VimpelCom.
Here are the current top ten FCPA enforcement actions of all time:
1. Siemens (Germany): $800 million in 2008.
2. Alstom (France): $772 million in 2014.
3. KBR / Halliburton (USA): $579 million in 2009.
4. Teva Pharmaceutical (Israel): $519 million in 2016.
5. Odebrecht / Braskem (Brazil): $419.8 million in 2016.
6. Och-Ziff (USA): $412 million in 2016.
7. BAE (UK): $400 million in 2010.
8. Total SA (France) $398 million in 2013.
9. VimpelCom (Holland) $397.6 million in 2016.
10. Alcoa (U.S.) $384 million in 2014.
Richard L. Cassin is the publisher and editor of the FCPA Blog.