Exclusive: Leniency deal for Brazil's Odebrecht may be world's largest

November 8, 2016 10:42 AM EST

A sign of the Odebrecht SA construction conglomerate is pictured in Lima, Peru, June 28, 2016. REUTERS/Janine Costa


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By Brad Brooks

SAO PAULO (Reuters) - U.S. and Swiss investigators are working with Brazilian counterparts to complete negotiations with Odebrecht, the construction company at the center of a massive political kickback scandal, in what is likely to be the world's largest leniency deal, people involved in the talks said.

Upwards of 80 Odebrecht employees are negotiating plea bargains and a leniency deal for the company. In return, they must testify about the conglomerate's central role in a scheme involving contracts with state-run oil company Petrobras .

Two sources said this was likely to be the world's largest leniency deal, exceeding a 2008 agreement in which German engineering company Siemens paid $1.6 billion to U.S. and European authorities for paying bribes to win government contracts.

The testimony is expected to implicate more than 100 current and former Brazilian politicians, some already ensnared in the probe, sources said.

It will probably hit top officials in the government of President Michel Temer, who took power in May following the impeachment of President Dilma Rousseff. Rousseff said her ouster was a "coup" by Temer and his allies to halt the corruption investigation.

Temer has consistently denied any wrongdoing or connection to the Petrobras "Car Wash" scandal, although several members of his Brazilian Democratic Movement Party, including some of his former ministers and the head of the Senate, are under investigation in the case.

The two sources involved in the talks told Reuters the deal would also expose wrongdoing in many of the 27 countries where Odebrecht [ODBES.UL] has conducted business. It could "give birth to 100 new investigations," one source said.

U.S. officials are involved because some of the money Odebrecht used as bribes flowed through the nation's banks, said both sources involved in the talks. The company also conducted projects on American soil.

U.S. investigators want information on any U.S. citizens or businesses that may have committed crimes in their dealings with Odebrecht, the sources said.

The Swiss government agreed last month to provide information to Brazilian investigators on transactions Odebrecht officials carried out through the country's secretive banks.

U.S. and Swiss authorities have agreed to levy only fines and not seek jail time for any Odebrecht executives, leaving Brazilian authorities to determine who should be sentenced, one of the sources said.

ODEBRECHT IN JAIL

Marcelo Odebrecht, the company's former chief executive, is serving a 19-year jail term after he was convicted of corruption this year. That sentence will be reduced once a plea bargain is reached.

The Swiss Attorney General's office confirmed it sent a team to Brazil last month "to coordinate their mutual actions within the framework of the ongoing criminal proceedings." No other details were provided.

The U.S. Department of Justice declined to comment on the matter.

Carlos Lima, a lead prosecutor on the Petrobras investigation, confirmed that several of the Car Wash investigations had involved American, Swiss and other foreign governments. He did not provide details.

Lima said the multiple jurisdictions where Odebrecht is accused of carrying out crimes had slowed the talks, which began in the first quarter.

Investigators must first agree to proceed with the plea bargains and leniency deal based on written statements from each executive's lawyer of what they would disclose.

Some sources involved have told Reuters these initial agreements could happen this month. Others say they could take longer.

Each executive must then verbally testify before prosecutors, who will submit that evidence to Supreme Court Justice Teori Zavascki, who will decide whether the plea bargains can be accepted.

If Zavascki does not rule before the court goes into recess on Dec. 19, the matter would probably wait until it is back in session on Feb. 1.

Only after Zavascki accepts the deals can prosecutors begin using the testimony in their inquiries.

The leniency deal for Odebrecht needs approval from federal Judge Sergio Moro. Along with prosecutors and police in the southern city of Curitiba, Moro has led the Petrobras probe, which began more than two years ago.

Moro is likely to approve a deal as long as it hits Odebrecht hard. The judge wrote in his sentencing of Marcelo Odebrecht this year that the company, which has already shed 50,000 jobs, should seek an agreement, considering the economic fallout should it fall into bankruptcy.

The privately held company, which has more than 100 billion reais ($31.3 billion) in debt, has been banned from new government contracts, and its credit has dried up since it became entwined in the investigation.

($1 = 3.19 reais)

(The story was refiled to add the dropped word "to" in paragraph 3)

(Reporting by Brad Brooks; Additional reporting by Joshua Franklin in Geneva; Editing by Lisa Von Ahn)



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