Odebrecht Tries to 'Turn the Page' After Bribery Scandal
Odebrecht executives began the task of rebuilding the scandal-ridden Brazilian company’s reputation at its business and engineering conference in New Orleans last month. “This is an opportunity to address a problem and to express our sincere apologies to the society as a whole and reinforce the commitment that we have set things right,” Flavio Faria, CEO of the Industrial Engineering Division, told attendees at the Downstream Engineering, Construction and Maintenance conference June 15.
Odebrect was a sponsor of the conference for the third year in a row, but it was the first time that Odebrecht has taken its message of “turning the page,” to its peers and potential customers.
“We are doing the best we can to get things right,” Faria said. “We have to show society that we are serious. And we can only show the society by deeds.”
Faria, who became head of the division in mid-2015, said the company is being transparent about the steps it has taken since the massive corruption scandal that rocked Brazil and helped bring down President Dilma Rousseff in 2016.
“This is not the most comfortable topic, but it is important,” added chief compliance officer Mike Munro. Odebrecht created its position following news of widespread, systemic corruption. After the scandal became public in 2015, about 77 people were fired, including Faria’s predecessor, Márcio Faria da Silva, who was charged in the scandal and became a key witness in “Operation Car Wash,” which sent former CEO Marcelo Odebrecht to prison.
Most of those let go, Faria says, were engineers. Faria, a mechanical engineer who has been with Odebrecht since 1994, says it’s everyone’s personal responsibility to report corruption. The company has implemented a stringent compliance program and a third party is operating an ethics hotline. The company encourages everyone, from the top down, to be ethical in their behavior, he says.
Faria expects it will take about two years to rebuild the company’s business and reputation. The company’s main client, state-owned oil company Petrobras, has been the center of the corruption scandal and most work on Petrobras’ facilities, including refineries and other plants, has been put on hold. The scandal put much of Brazil into an economic depression, further limiting work in Brazil. Odebrecht only has one project within the country, Faira says.
Odebrecht’s industrial division is now seeking work in Latin America, Africa and the Middle East. While overcoming the scandal has been one challenge, the other is working with so many different potential clients, Faria says.
“In the past, we had one huge client, Petrobras. We know what they wanted and their way of doing the projects. Now we have a variety of clients, each one with their own way of doing their projects. We have to be up to this new task.”
Despite the company’s efforts, Odebrecht continues to be at the center of controversy throughout the world. In May, 10 people were arrested in the Dominican Republic for ties to about $92 million in bribes allegedly paid by Odebrecht in exchange for public works contracts.
According to a statement of facts released by the U.S. Dept. of Justice, between 2001 and 2016 Odebrecht and co-conspirators paid about $788 million in bribes associated with 100 projects in 12 countries, including Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru and Venezuela.
Odebrecht funneled the bribes through shell companies in the British Virgin Islands, including Smith & Nash Engineering Co. The Dept. of Justice said Odenbrecht and its co-conspirators benefited by more than $3.3 billion as a result of the bribes.
As part of a settlement with the Dept. of Justice, Odebrecht will pay at least $3.5 billion to authorities in Brazil, Switzerland and the United States over 20 years.
Munro says the relatively quick agreement negotiated with the Justice Dept., six months instead of the typical three to five years, indicates that Odebrecht’s corporate culture has “truly changed.”