Brazils Operation Car Wash What to Expect Next Kelly Kramer Salim - - PowerPoint PPT Presentation

Brazil’s “Operation Car Wash”— What to Expect Next

March 16, 2016

Kelly Kramer Partner + 1 202 263 3007 kkramer@mayerbrown.com Salim Jorge Saud Neto Partner +55 21 2127 4210 sjsaud@mayerbrown.com Arturo Vecchi Associate +55 21 2127 4254 avecchi@mayerbrown.com

Speakers

Salim Jorge Saud Neto Kelly Kramer Arturo Vecchi Salim Jorge Saud Neto Rio de Janeiro - TC +55 21 2127 4210 sjsaud@mayerbrown.com

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Kelly Kramer Washington, DC + 1 202 263 3007 kkramer@mayerbrown.com Arturo Vecchi Rio de Janeiro - TC +55 21 2127 4254 avecchi@mayerbrown.com

Operation Car Wash - Scheme

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2014 Elections Winning Ticket

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President Rousseff PT Vice-President Temer PMDB

Operation Car Wash - 2014

March 17 March 20 2nd Phase – “Bidone” Alberto Costa April 11 June 11 4th Phase – “Casablanca” Alberto Costa arrested July 1 August 22 6th Phase – “Bidone 3” Alberto Costa plea October November 14 7th Phase – “Doomsday” December

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1st Phase Costa arrested 3rd Phase “Dolce Vitta” arrested again 5th Phase “Bidone 2” Costa plea bargain Elections Dilma Rousseff re-elected Congressional Committee Report

Speaker of the House

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Eduardo Cunha PMDB

Operation Car Wash - 2015

Jan 14 9th Phase “My Way” Aug 03 Nov 24 Sep 30 Mar 6 Cunha’s deposition at CPI New Congressional Investigation Commitee (CPI) Feb Mar 16 11th Phase Apr 15 Petrobras Financial Statements BRL6.2 Billion losses due to corruption May 21 14th Phase Marcelo Odebrecht arrested July 2 16th Phase Corruption at Nuclear Power Company 18th Phase Pixuleco II Sep 1 19th Phase “Nessum Dorma” TCU rejects Rousseff’s accounting for 2014 Oct 15 Opinion in favor of Impeachment by House legal department Nov 03 20th Phase Senator Delcídio Amaral and BTG pactual Banker André Esteves arrested. Dec 2 22nd Phase Catiline Focus on Eduardo Cunha

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8th Phase “Nestor Cervero” Feb Aug 13 17th phase “Pixuleco” José Dirceu arrested Sep 21 Nov 16 Oct 7 Investigations at Supreme Court Mar 12 Cunha defeats PT candidate and is Speaker

• f the

House Feb 5 10th Phase “What Kind of Country is this? Apr 10 12th Phase Vaccari (PT treasurer) arrested April 22 13th Phase Jun 19 15th Phase Jul 16 Impeachment Request Filed Cunha’s Swiss Accounts unveiled Updated Impeachment Request submitted Oct Cunha’s Ethics Committee Proceeding 21st Phase Nov 25 Impeachment Request Admitted by Cunha Dec 15

Impeachment Proceeding and Supreme Court Decisions

• Impeachment proceedings started at the House of Representatives

with the government suffering a loss of 272 v 199 at a procedural vote

– For the impeachment vote, government needs 171 Votes to avoid the commencement of the proceedings

• Proceeding is suspended by Supreme Court
• STF decision has been issued and is pending appeal
• Appeal is expected to be voted either today or tomorrow

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History

• Delcidio Amaral under house arrest – Feb 19, 2016

– Rumors that he entered into a plea bargain had not been confirmed at the time

• Extracts of his deposition have surfaced in March and implicate President Roussef,

Former President Lula and Minister of Justice, Eduardo Cardoso

– Official reason for release was that he no longer was a threat to the investigations – Senator Delcidio is currently – Senator Delcidio is currently facing an ethics proceeding at the Senate and can be expelled – Senator Delcidio decided not to return to the Senate and is

• n medical leave

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History

• Delcidio plea bargain confirmed – Mar 15, 2016

– Several politicians implicated on obstruction of justice:

• President Dilma Rousseff
• Former President Lula
• Minister Mercadante
• Former Minister Antonio Palocci

– Several politicians implicated on Corruption:

• Former presidential candidate and Senator Aecio Neves
• Vice President Temer

– Links to Mensalão – the political scandal during the Lula administration

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History

• 23rd phase – “Acarajé” – Feb 22, 2016

– Focused on João Santana, PT’s marketing advisor, and his wife – Zwi Skornicki, an alleged middleman, and Odebrecht were also targets

• f this phase – the Federal Police investigates the payment of USD 7

million by them to João Santana – 51 judicial warrants enforced in Rio de Janeiro, São Paulo e Bahia:

• 38 for search and seizures
• 2 for preventive arrest
• 6 for temporary arrest
• 5 detentions for questioning

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History

• 24th phase – “Alethea” – Mar 03, 2016

– Focused on the investigation on the relation between the former president Luis Inácio “Lula” da Silva and companies involved in the Petrobras corruption scheme – donations and payments for lectures – 44 judicial warrants enforced:

• 33 for search and seizure
• 11 for detentions for questioning, including the former president Luiz Inácio
• 11 for detentions for questioning, including the former president Luiz Inácio

“Lula” da Silva

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History

• Reactions to Alethea

– Criticism by attorneys and judges of the detention of former President Lula, as he had not been previously summoned to be deposed

• Judges are expected to be more cautious in new detentions

– Significant support of the detention by general public opinion – PT President and former President Lula urge supporters to go to the streets streets – President Roussef publicly supports Lula, criticizing the decision of Judge Moro – President Roussef invites Lula to become a minister – this would grant him a privilege of venue and he could

• nly be prosecuted by the Supreme

Court

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History

• Reactions to Alethea

– Race to arrest Lula

• São Paulo public prosecutors request the

indictment of President Lula and his family for hiding assets

• Preventative arrest of Lula is requested

in connection with application for indictment

• São Paulo judge declined jurisdiction
• São Paulo judge declined jurisdiction

– PMDB (party of vice-president) prohibits its members to accept appointments to the Federal Government and start procedures to leave government in 30 days – Support for impeachment grows and President vows not to resign – Markets react favorably to a potential end of Roussef Government – Massive demonstrations against former President Lula and President Roussef last Sunday

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History

• Demonstrations

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History

• Demonstrations

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History

• Demonstrations

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History

• Demonstrations

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Current Status in Brazil

• Investigations and criminal proceedings being conducted at the

Supreme Federal Court against sitting members of Congress and Ministers of State

• Investigations and criminal proceedings being conducted at the

Federal Court in Curitiba against other individuals

• Proceedings against companies for cartel violations at CADE –

Proceedings against companies for cartel violations at CADE – Brazilian Antitrust Authority

• Proceedings against companies for corruption before the CGU – 29

proceedings

• Improbity lawsuits against individuals and companies

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What to Expect Next in Brazil

• The Federal Police and the Public Prosecutor’s Office are still

questioning several individuals and it is not possible to be certain which executed or not a plea bargain and what was said in the full content of the depositions

• Lawsuits have already been filed against high-level executives of EPC

companies, politicians and operators, and some have already been convicted convicted

• Investigations are now very close to politicians – any new fact may

have significant political impact

• Impeachment proceeding is likely going to affect investigations
• A number of companies involved have been considering and

negotiating leniency agreements

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Operation Car Wash - Current Status in the US

• US Department of Justice and Securities and Exchange Commission
• Petrobras has publicly disclosed that it is under investigation by the DOJ and

the SEC, as have a variety of companies that did business with Petrobras

• The DOJ is also providing formal and informal assistance to Brazil, such as

tracing the proceeds of suspected bribery

• Patrick Stokes, the Chief of the DOJ’s FCPA Unit, reportedly personally visited

Brazil to meet with prosecutors Brazil to meet with prosecutors

• US Private Securities Claims
• Petrobras has been sued in class actions and opt-outs for securities fraud
• Judge Rakoff recently certified the class actions and authorized discovery,

including discovery in Brazil via Letters Rogatory

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Operation Car Wash – Status Globally

• Global operation:
• Reportedly, around $30 million has been frozen in accounts held by

Petrobras executives and Petrobras’ counterparties’ executives

• US and Swiss authorities playing leading role on asset-tracing efforts
• Expanding operation:
• Argentina and other Latin American countries have reportedly
• Argentina and other Latin American countries have reportedly

launched parallel investigations of Odebrecht and Petrobras

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Operation Car Wash – What to Expect Next

• Multi-polar enforcement is the new reality
• Companies caught up in the Petrobras investigation face scrutiny in

multiple countries (Brazil, Netherlands, Switzerland, US, Argentina)

• “Home” jurisdictions increasingly focused on foreign bribery
• US: Continued enforcement of FCPA
• Netherlands: $240 million settlement with SBM Offshore
• Netherlands: $240 million settlement with SBM Offshore
• Brazil: CGU recently announced initiative to monitor Brazilian firms’

conduct outside of Brazil

• UK: Successfully enforced UK Bribery Act

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Thank You

For questions, please reach out to:

• Kelly Kramer, Partner

+1 202 263 3007 +1 202 263 3007 kkramer@mayerbrown.com

• Salim Jorge Saud Neto, Partner

+55 21 2127 4210 sjsaud@mayerbrown.com

• Arturo Vecchi, Associate

+55 21 2127 4254 avecchi@mayerbrown.com

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