Odebrecht’s money laundering program in Brazil caught by DOJ

On May 25, 2021, the US Department of Justice (“DOJ”) unsealed a charge indicting two Austrian citizens, Peter Weinzierl (“Weinzierl”) and Alexander Waldstein (“Waldstein”), for their role in a scheme to launder hundreds of millions of dollars through the US financial system on behalf of the Brazilian construction conglomerate, Odebrecht SA (“Odebrecht”). The indictment alleges that Weinzierl and Waldstein helped Odebrecht transfer money to offshore accounts to pay bribes to government officials in Brazil, Panama and Mexico. the ad was scheduled to coincide with Weinzierl’s arrest in the UK; however, Waldstein remains at large.

This enforcement measure is notable for a number of reasons:

(1) The DOJ used US money laundering laws to charge Weinzierl and Waldstein with corruption-related misconduct, as the two people are likely outside the scope of the Foreign Corrupt Practices Act (” FCPA ”);

(2) it announces a widely expected increase in the fight against corruption and money laundering demanded by the Biden administration;

(3) it emphasizes the continued attention paid to Latin America and Brazil in particular as a target in the fight against corruption and money laundering; and

(4) The arrest of Weinzierl by the British authorities at the request of their American counterparts underlines close and continuous cooperation between the two jurisdictions.

EDNY recently unveiled the Weinzierl / Waldstein indictment

The Eastern District of New York (“EDNY”) indictment charges Weinzierl and Waldstein, former bank executives and Austrian citizens, with several money laundering offenses. Weinzierl was the CEO of a private bank in Austria, for which Waldstein was an officer. The two men were also directors of a second bank, based in Antigua and Barbuda. The indictment alleges that between 2006 and 2016, the two individuals laundered more than $ 170 million held in New York bank accounts by Odebrecht. Acting in tandem with Odebrecht and other co-conspirators, Weinzierl and Waldstein used the Austrian bank to funnel the money to Odebrecht’s offshore accounts in Antigua. Odebrecht used this money to pay bribes to government officials in Brazil, Panama and Mexico in order to obtain and keep business.

This indictment represents the last criminal charges following the comprehensive agreement of December 2016 with Odebrecht and its subsidiary Braskem. In the 2016 plea agreements, the two companies admitted to paying hundreds of millions of dollars in bribes to foreign government officials since 2001. Odebrecht and Braskem pleaded guilty to violating the FCPA and have agreed to pay approximately $ 3.5 billion in penalties to the United States, Brazil and Brazil. Swiss authorities, although these fines were subsequently reduced due to Odebrecht’s financial difficulties.

Using anti-money laundering laws to target foreign bribery

The lawsuits against Weinzierl and Waldstein are a reminder that the DOJ will use all the prosecution tools in its toolkit to enforce anti-corruption efforts abroad, even when the underlying misconduct is beyond the reach of the FCPA . Prosecutors for the Eastern District of New York and the Fraud Section of the DOJ used the Money Laundering Acts, 18 USC §§ 1956 and 1957, to charge Weinzierl and Waldstein with foreign bribery misconduct. According to the indictment, the defendants were executives of foreign banks and they facilitated the flow of funds to offshore bank accounts so that Odebrecht could use them to pay bribes to government officials in Panama, Mexico and Brazil.

DOJ prosecutors have chosen not to prosecute the FCPA charges apparently because Weinzierl and Waldstein fall outside the category of defendants under the statute. As directors of foreign banks, neither Weinzierl nor Waldstein are natural persons covered by the FCPA, that is to say, US citizens; officers, directors, employees or agents of a US corporation; or individuals who commit a fault while in the United States. As a result, the DOJ has indicted defendants with money laundering offenses for what is primarily a conspiracy to commit acts of foreign bribery in violation of the FCPA.

Biden administration continues recent trend and prioritizes fight against corruption

EDNY has exposed Weinzierl and Waldstein’s indictment as the Biden administration ramps up its anti-corruption agenda. The 2020 Anti-Money Laundering Act strengthens the government’s power to control financial markets by enacting a wide range of requirements for federal agencies and relevant financial institutions. Additionally, a June 3, 2021 White House memo titled “Make anti-corruption a core U.S. national security interest”Calls on many government agencies and offices to review and develop strategies to strengthen anti-corruption efforts in the United States and abroad. The President’s Bridge initiative that requires cross-agency cooperation is not entirely new, but it strengthens DOJ’s efforts to fight corruption and create a level playing field for companies competing for business. abroad. As the Biden administration takes hold, one thing becomes clear: the DOJ is sharpening its teeth and seeking to target individuals and businesses involved in foreign bribery and will use all available legislation to bring companies and individuals to be held to account.

Continuous focus on Brazil / LATAM

Brazil and Latin America continue to be at the center of the concerns of the United States, the United Kingdom and other international law enforcement authorities in the prosecution of individuals and companies for criminal offenses. corruption. On June 7, 2021, United States Attorney General Merrick B. Garland, ad an initiative targeting corruption and human trafficking in Guatemala, El Salvador and Honduras. The first half of 2021 was also marked by law enforcement activities relating to corruption programs involving state oil companies of Ecuador and Venezuela.

The Weinzierl / Waldstein indictment is another example of international execution measures flowing from the ‘Car Wash’ investigation (“Lava Jato ”). Brazil’s initial investigation into the corruption of Petrobras officials dates back to March 2014 and resulted in jail terms for around 300 people and billions of dollars in fines and financial settlements with the companies involved.

Odebrecht signed leniency agreements with the American, Brazilian and Swiss authorities in december 2016 and concluded its three and a half year surveillance mandated by the Ministry of Justice in november 2020. Weinzierl’s arrest and indictment shows that related enforcement actions against businesses and individuals are ongoing and ongoing. As we pointed out in november 2020 in our update on another car wash related enforcement action, the truly global reach of the misconduct and investigation combined with the sheer volume of information obtained through cooperating witnesses means that the enforcement international will likely continue for several years.

© Copyright 2021 Cadwalader, Wickersham & Taft LLPRevue nationale de droit, volume XI, number 163

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