SEC v. BRASKEM, S.A., No. 1:16-cv-02488, District of Columbia (Dec. 21, 2016) — Complaint

1

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff, Civil Action No.

v.

BRASKEM, S.A.,

Defendant.

COMPLAINT

 Plaintiff Securities and Exchange Commission (the “Commission”) alleges:
SUMMARY
1. This action arises from violations of the Foreign Corrupt Practices Act (“FCPA”)
by Braskem S.A. (“Braskem” or the “Company”), a Brazilian petrochemical company.
2. Beginning in at least 2006 and through approximately 2014, Braskem paid bribes
to foreign political parties and foreign officials in the government of Brazil in order to assist
Braskem in obtaining or retaining business in that country.  Braskem paid theses bribes through a
complex web of international intermediaries and offshore bank accounts.  Certain senior
Braskem executives authorized and approved these payments while knowing that all or a portion
of the funds would be passed onto foreign officials in the government of Brazil.
3. Braskem made approximately $250 million
1
 in improper payments to an illicit
network that its controlling shareholder operated and used to make improper payments during
the relevant time period.  At least $75 million of the amount paid into the illicit network was

1
 Unless otherwise indicated, all dollar amounts are represented in U.S. dollars.

2

used for bribes that directly benefited Braskem.
4. The bribes Braskem paid during the relevant time period went to various foreign
officials in Brazil, including at least one official at Petróleo Brasileiro S.A. (“Petrobras”), the
Brazilian state-owned petroleum company, senators and representatives of the Brazilian
congress, and foreign political party officials with at least two leading political parties in Brazil.
5. In exchange for the bribes, a government official at Petrobras intervened on
Braskem’s behalf in connection with the pricing formula for a 2009 supply agreement for the
purchase from Petrobras of naphtha, the raw material used in Braskem’s production of
petrochemicals.  This favorable pricing formula reduced Braskem’s price of naphtha by
approximately $94 million from approximately March 2009 until February 2014.
6. Braskem also received several tax credits and benefited from other legislative
measures over the relevant time period of time that allowed it to avoid approximately $187
million in consolidated expenses and costs.  Finally, Braskem netted approximately $8 million
when certain executives at the Company bribed officials in the Brazilian government, who used
their influence with Petrobras to prevent Petrobras from terminating a joint venture agreement
involving a polypropylene plant.  Petrobras’s continued involvement in the polypropylene plant
made it more profitable for Braskem.
7. The illicit payments were paid directly by Braskem, or by its Cayman Islands-
based subsidiary, Braskem Incorporated Ltd., to intermediaries disguised as export consulting
companies using accounts in the U.S., among other jurisdictions.
8. Braskem and its subsidiary, at the direction of these senior executives, created
false books and records to conceal the bribe payments.  These payments were improperly
recorded as legitimate commission expenses in Braskem’s books and records and were

3

consolidated into Braskem’s financial statements.  Braskem’s internal accounting controls were
inadequate because they failed to prevent such payments or detect red flags that should have
alerted its employees that these payments, in whole or in part, were fictitious and used to bribe
foreign officials.
9. As a result of its conduct, Braskem violated Section 30A of the Securities
Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78dd-1] when it authorized or paid bribes
to foreign political parties and foreign officials in the government of Brazil to influence their
decisions securing improper advantages or to induce them to use their influence to affect the acts
or decisions of a foreign government or instrumentality in order to assist Braskem in obtaining or
retaining business.  Braskem violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §
78m(b)(2)(A)] when it created false books and records to conceal the bribery scheme.  Braskem
also violated Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)] by failing to
have sufficient internal accounting controls in place to detect and prevent the authorization of the
illicit payments over an extended period of time.
10. Braskem is reasonably likely, unless restrained and enjoined, to continue to
engage in the acts and practices set forth in this complaint, and in acts and practices of similar
purport and object.
JURISDICTION AND VENUE
11. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and
27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
12. Braskem has shares registered with the Commission pursuant to Section 12(b) of
the Exchange Act and files periodic reports with the Commission.  The shares registered are
represented by American Depositary Receipts that are traded on the NYSE under the symbol

4

BAK.  Braskem’s shares were registered with the Commission pursuant to Section 12(b) of the
Exchange Act [15 U.S.C. § 781].  As such, Braskem was required to file reports, including Form
20-F, with the Commission pursuant to Section 13(a) of the Exchange Act [15 U.S.C. § 78m],
and the related rules thereunder, and was an “issuer” within the meaning of the FCPA [15 U.S.C.
§ 78dd-1, et seq.].
13. Braskem, directly or indirectly, made use of the means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange in
connection with the transactions, acts, practices, and courses of business alleged in this
Complaint.
DEFENDANT
14. Braskem S.A. is a company headquartered in São Paulo, Brazil that produces
petrochemical and thermoplastic products.  The Company is the largest producer of
thermoplastic resins in the Americas and the only producer of ethylene, polyethylene, and
polypropylene in Brazil.  As of 2015, Braskem had approximately 8,000 employees and
approximately $47 billion reais in net sales.
RELATED ENTITIES
15. Odebrecht S.A. (“Odebrecht”) is a privately-held company based in Brazil that
indirectly owned approximately 38% of Braskem’s outstanding share capital and approximately
50.11% of the Company’s voting share capital directly or through a wholly-owned subsidiary
during the relevant time period.  Odebrecht is the holding company of a conglomerate engaged in
engineering, oil and gas, real estate development, and other ventures.  Odebrecht’s then chief
executive served as Chairman of Braskem’s board of directors during the relevant time period
and played a key role in Braskem’s involvement in the illicit bribery scheme alleged herein.

5

16. Petróleo Brasileiro S.A. (“Petrobras”) is an integrated energy company based in
Rio de Janeiro, Brazil with operations in about 28 countries.  The company had securities
registered with the Commission, represented as American Depositary Receipts, which are traded
on the NYSE under the symbol PBR.  As of December 31, 2015, the Brazilian federal
government held approximately 3.74 billion of the more than 7.4 billion Petrobras outstanding
common shares (or approximately 50.5%).  As such, Petrobas was a state-owned enterprise and
its employees are “foreign officials” under the FCPA [15 U.S.C. § 78dd-1(f)(1)(A)].  Petrobras
also owned approximately 36.07% of Braskem’s outstanding share capital and 47.03% of the
Company’s voting share capital during the relevant time period.
17. Braskem Incorporated Ltd. is a wholly-owned operating subsidiary of Braskem
based in the Cayman Islands.
FACTUAL ALLEGATIONS
 A. The Illegal Payment Scheme
18. Beginning in approximately 2006, senior Braskem executives authorized and
directed the payment of bribes to foreign officials in the government of Brazil.  As a result,
Braskem secured an improper advantage in order to obtain or retain business in Brazil.
19. The bribery scheme used a complex network of offshore shell companies, bank
accounts located in traditional tax havens, individual currency dealers, and off-book financial
accounts in order to make improper payments to government officials, political parties, and
improper political campaigns contributions in Brazil.  Former senior executives at Braskem
diverted Braskem funds into Odebrecht’s off-book accounts in or around 2006 to make these
illegal payments to foreign officials in the government of Brazil for the benefit of Braskem in
Brazil.

6

20. At the time, Odebrecht was Braskem’s controlling shareholder and had the power
to appoint or designate, and did appoint or designate Braskem’s CEO and CFO.  Then senior
Braskem and Odebrecht executives during the relevant time period approved the funds that
Braskem diverted through Odebrecht’s off-book accounts.
21. Braskem, directly or through its subsidiary, diverted funds into the Odebrecht’s
off-book accounts by fabricating commission and making payments into offshore bank accounts
controlled by three shell companies.  The shell companies then facilitated the transfer of the
Braskem money into the Odebrecht off-books accounts that could then be used to make the
improper payments.
22. Between approximately 2006 and 2014, Braskem diverted approximately $250
million into the Odebrecht off-book accounts in order to facilitate bribe payments to officials in
the government of Brazil to benefit Braskem in Brazil.  Specifically, Braskem paid
approximately 87.5 million reais (valued at approximately $26 million presently) to one shell
company formed in June 2006 (referred to as “Consultant A”).  Braskem paid 272.2 million reais
(valued at approximately $81 million presently) to another shell company also formed in June
2006 (referred to as “Consultant B”).  Braskem also paid an additional 18.5 million reais (valued
at approximately $5.5 million presently) to Consultant A and Consultant B.
23. Additionally, Braskem Incorporated Ltd. paid $1.9 million to Consultant A, $2
million to Consultant B, and $10.5 million to a third shell company (referred to as “Consultant
C”) during the relevant time period.
24. The invoices these shell companies delivered to Braskem typically identified the
amount due as “commissions on the amount FOB exports to your various customers...” during a
certain period of time.  The invoices further referred to an export agency agreement.  However,

7

no export services were required for the customers or products involved in these dealings.
Additionally, no valid agency agreement existed.  Thus, no commissions were ever incurred or
due on the exports or for the customers identified in the invoices.  As a result, these invoices bore
no relation to any legitimate services that these entities rendered.
25. Braskem’s payments to Consultant A and Consultant B were improperly recorded
in at least 926 general ledger entries at Braskem as Commissions Payable.  Braskem
Incorporated Ltd.’s payments to Consultant A, Consultant B, and Consultant C were improperly
recorded in at least 14 general ledger entries as Commissions Payable.  Braskem Incorporated
Ltd.’s payments were paid in U.S. dollars and, in some instances, through financial institutions in
the U.S. and its books and records were consolidated in Braskem’s financial statements filed
with the Commission.
26. In all, Braskem, directly or through its subsidiary, paid approximately $250
million into Odebrecht’s off-book accounts.  Former senior Braskem executives were aware at
the time they approved the payments that the funds paid to Consultant A, Consultant B, and
Consultant C would be passed, in whole or in part, on to government officials in the government
of Brazil, including the Petrobras and Brazilian party officials referred to in this Complaint.
  a. Braskem’s illegal payments to Petrobras officials relating to a
   polypropelyne plant located in Paulinia, Sao Paulo (Brazil)

27. In or around 2005, Braskem and Petrobras executed an agreement for a joint venture
between Petrobras and Braskem to build a plant.  Due to public pressure, senior Braskem executives
feared that Petrobras intended to terminate the agreement even though early termination of the
agreement would have required Petrobras to pay Braskem an early termination penalty.
28. At least two former senior Braskem executives met with Petrobras’s chief
downstream officer (“Brazilian Official A”) and a Brazilian congressman (“Brazilian Official

8

B”).  Brazilian Official A and Brazilian Official B demanded that Braskem pay them, and
Braskem did pay them, approximately $4.3 million in exchange for their influence to prevent
Petrobras from terminating the agreement.  The direct financial benefit to Braskem by avoiding
the early termination of this agreement was approximately 27 million reais (valued at
approximately $8.4 million presently).
29. Braskem paid all of the approximately $4.3 million in bribes through Odebrecht’s
off-book accounts.  Braskem mischaracterized the payments in its books and records as
Commissions Payable even though at least two of its then senior executives knew these funds
were reasonably likely passed through to foreign officials in Brazil.  These payments were
consolidated in Braskem’s financial statements as legitimate business costs or expenses.  As a
result, Braskem did not, in reasonable detail, accurately and fairly reflect these payments in its
books and records.
  b. Braskem’s illegal payments to Petrobras officials relating to
   the 2009 naphtha supply agreement

30. In or around 2008, Petrobras and Braskem began negotiating with Petrobras for a
supply agreement for the sale and acquisition of naphtha, a derivative from crude oil Braskem
uses in its petrochemical production.  Braskem is Brazil’s largest consumer of naphtha and
purchases approximately 70% of its demand from Petrobras, the only Brazilian supplier of
naphtha.
31. At and before this time, Petrobras determined the price for naphtha by using the
international market price for naphtha + $2.  The international market price of naphtha is
historically linked to the Amsterdam-Rotterdam-Antwerp market price of naphtha (typically
referred to as “ARA”) and to the fluctuating reais/U.S. dollar exchange rate.  In 2008, Petrobras
wanted to negotiate long term supply contracts directly with petrochemical companies such as

9

Braskem.
32. In or around late-2008, a former senior Braskem executive met again with
Brazilian Official A and Brazilian Official B to negotiate a long-term naphtha supply agreement
between Braskem and Petrobras.
33.   The former senior Braskem executive agreed to pay, and Braskem did pay,
Brazilian Official A and Brazilian Official B approximately $20 million over time.  In return,
Brazilian Official A and Brazilian Official B used their influence over the contract approval
process at Petrobras to require that the  naphtha supply contract with Braskem use a pricing
formula that reduced Braskem’s cost of naphtha.
34. During the negotiations between Braskem and Petrobras from approximately
November 2008 until Braskem and Petrobras signed the naphtha supply contract in July 2009
(made retroactive to March 2009), Brazilian Official A represented Petrobras as its lead
negotiator.
35. Brazilian Official A also used his influence over Petrobras’s technical team and
the Petrobras executive board to approve a supply agreement that reduced Braskem’s cost of
naphtha by approximately $94 million from March 2009 through February 2014.  Petrobras
terminated the contract in or around February 2014.
36. During the relevant time period, Brazilian Official A met with former senior
Braskem executives on an annual basis to confirm and authorize the bribe arrangement.  The
intermediary also met directly, or through an employee, with another former senior Braskem
executive to receive bank wire transfer information and to deliver wire transfer confirmations.
37. Braskem paid all or a portion of the approximately $20 million in bribes through
Odebrecht’s off-book accounts.  Braskem mischaracterized the payments in its books and

10

records as Commissions Payable even though certain of its then senior executives knew these
funds were reasonably likely passed through to government officials in Brazil.  These payments
were consolidated in Braskem’s financial statements as legitimate business costs or expenses.
As a result, Braskem did not, in reasonable detail, accurately and fairly reflect these payments in
its books and records.
  c. Braskem’s illegal payments to officials in the Brazilian
   federal legislature relating to several legislative measures

38. Beginning in or around 2006, senior Braskem executives agreed to pay bribes,
and Braskem did pay bribes, to foreign officials in the government of Brazil in exchange for
certain legislative measures that would benefit, and did benefit, Braskem.  The measures
included, but were not limited to, passing a law allowing a tax credit for the purchase of naphtha
and expanding the credit to other raw materials used in the petrochemical industry.
39. For example, prior to 2005 Brazilian law did not allow companies to take any tax
credit for the acquisition of naphtha.  In 2005, the Brazilian congress passed a measure into law
that provided a 3.65% tax credit for the acquisition of naphtha.  In 2013, the 3.65% tax credit
was expanded to include other raw materials Braskem acquired.
40. As described herein, Braskem began diverting funds into Odebrecht’s off-book
accounts through Consultant A, Consultant B, and Consultant C in or around 2006.  These funds
were ultimately passed on to officials in the government of Brazil as part of the illicit bribe
scheme described herein.  A portion of the funds passed through Odebrecht’s off-book accounts
went to officials in the government of Brazil in exchange for the passing of the tax laws in 2005
and 2013.

41. Specifically, three former senior Braskem executives agreed to divert Braskem
funds to two officials in the Brazilian senate and two Brazilian representatives in exchange for

11

their influence to increase and extend the tax credit on naphtha to other raw materials that
Braskem acquires in the general course of its business.  In all, Braskem illegally paid these
officials approximately 6 million reais, or approximately $1.74 million in or around October
2013.
42. Moreover, a Braskem director instructed Braskem to divert approximately 100
million reais, or approximately $29 million, in funds through Odebrecht’s off-book accounts to
officials in one of Brazil’s leading political parties to use their influence in order to assist in
obtaining the result of increasing and extending the tax credit to include raw materials other than
naphtha.
43. Braskem’s financial benefit from the 2005 tax credit was approximately 62
million reais, or approximately $19 million.  Braskem also saved approximately $168 million
through the end of 2013 from the 2013 tax credit.
44. The bribes paid to influence foreign officials to enact the tax credits were
processed through Odebrecht’s off-book accounts as payments to Consultant A, Consultant B,
and Consultant C, and recorded as Commissions Payable.  These payments were consolidated in
Braskem’s financial statements as legitimate business costs or expenses.  As a result, Braskem
did not, in reasonable detail, accurately and fairly reflect these payments in its books and records.
 B. Lack of Compliance and Failure to Maintain
  Adequate Internal Accounting Controls

45. During the relevant time period, Braskem’s policies, procedures, or controls did
not specifically address the FCPA.  For example, Braskem’s Code of Conduct during the
relevant time period referred to employees’ relationship with clients and shareholders and
governed the use of privileged information.  However, Braskem’s Code of Conduct in effect at

12

the time failed to prohibit improper payments to foreign officials or political parties or reference
the FCPA.
46. Braskem had an ethics committee comprising four full members, including a legal
representative, who decided matters relating to Braskem’s Code of Ethics and other policies.
Braskem employees were encouraged to report potential misconduct by Company employees,
third-party suppliers, and clients through an ethics line.  The allegations contained in this
Complaint were never reported through Braskem’s ethics line or to its ethics committee even
though the improper payments were significant over time and the approval of such payments
involved certain senior Company managers who understood the purpose of the “commission”
payments to the intermediary companies.
47. Braskem’s procurement and accounts payable processes during the relevant time
period lacked adequate payment approval standards and were easily manipulated by the senior
executives.  For example, Company employees could manually add commission payments to
third parties without verification of the existence of a contract.  The same employee that added
the commission payment could then send the request for payment without the need for approval
by a second employee.
48. The improper payments to third-party agents such as Consultant A and Consultant
B could have been prevented or detected if Braskem’s internal accounting controls had required
the payments to be attached to a valid contract, which they did not.  In fact, Braskem did not
have a valid agency or consulting agreement with Consultant A, Consultant B, or Consultant C.
The improper payments to Consultant A, Consultant B, and Consultant C were made without the
identification of a legitimate sale or a customer connected to the payment of the commission
remitted.  As a result, Braskem’s limited internal procurement controls lacked the creation of

13

records to provide reasonable assurances that payments were recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principles
in Brazil and the U.S. and failed to maintain accountability for its assets.
CLAIMS FOR RELIEF
FIRST CLAIM

Violations of Section 30A of the Exchange Act

49. Paragraphs 1 through 48 are re-alleged and incorporated by reference.
50. As described above, Braskem, through its officers, directors, employees, or agents
corruptly offered, promised to pay, or authorized unlawful payments to one or more persons,
while knowing that all or a portion of those payments would be offered, given, or promised,
directly or indirectly, to foreign officials for the purposes of influencing their acts or decisions in
their official capacity, inducing them to do or omit to do actions in violation of their lawful
duties, securing an improper advantage, or inducing such foreign officials to use their influence
with a foreign government or instrumentality thereof to assist Braskem in obtaining or retaining
business.
51. By reason of the foregoing, Braskem violated, and unless enjoined, will continue
to violate, the anti-bribery provisions of the FCPA, as codified at Section 30A of the Exchange
Act [15 U.S.C. § 78dd-1].
SECOND CLAIM
Violations of Section 13(b)(2)(A) of the Exchange Act
52. Paragraphs 1 through 48 are re-alleged and incorporated by reference.

14

53. As described above, Braskem, through its officers, agents, subsidiaries, and
affiliates, failed to make and keep books, records, and accounts which, in reasonable detail,
accurately and fairly reflected its transactions and dispositions of its assets.
54. By reason of the foregoing, Braskem violated, and unless enjoined, will continue
to violate, the books-and-records provisions of the FCPA, as codified at Section 13(b)(2)(A) of
the Exchange Act [15 U.S.C. § 78m(b)(2)(A)].
THIRD CLAIM

Violations of Section 13(b)(2)(B) of the Exchange Act

55. Paragraphs 1 through 48 are re-alleged and incorporated by reference.
56. As described above, Braskem, through its officers, directors, employees, or agents
acting on its behalf, failed to devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) payments were made in accordance with
management’s general or specific authorization; and (ii) payments were recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles or any other criteria applicable to such statements, and to maintain accountability for
its assets.
57. By reason of the foregoing, Braskem violated, and unless enjoined, will continue
to violate, the internal accounting controls provisions of the FCPA, as codified at Section
13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that this Court enter a judgment:
 A. Permanently restraining and enjoining Braskem, and its officers, agents, servants,
employees, attorneys, and all person in active concert or participation with it who receive actual

15

notice of this injunction by personal service or otherwise, from violating Sections 30A,
13(b)(2)(A), and  13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78dd-1, 78m(b)(2)(A), &
78m(b)(2)(B)];
 B. Ordering Braskem to disgorge ill-gotten gains, illegal losses avoided, and unjust
enrichment obtained as a result of its illegal conduct;
 C. Granting such other and further relief as the Court may deem just and appropriate;
and
 D. Retaining jurisdiction over this action in order to implement and carry out the
terms of all orders and decrees that it may enter, or to entertain any suitable application or
motion by the Commission for additional relief within the jurisdiction of this Court.
Dated:    December 21, 2016     Respectfully submitted,
      /s/ David S. Johnson
      David S. Johnson
      Assistant Chief Litigation Counsel
D.C. Bar No. 477298
SECURITIES AND EXCHANGE
COMMISSION
      100 F Street, N.E.
      Washington, D.C. 20549
      Direct Dial: (202) 551-2218
      E-mail: [email protected]

Ernesto Palacios
      Senior Counsel, FCPA Unit
Florida Bar No. 0529168
Direct Dial: (305) 982-6306
      E-mail: [email protected]
      Attorneys for Plaintiff
Of Counsel:

Thierry Olivier Desmet
Assistant Director, FCPA Unit
Securities and Exchange Commission
801 Brickell Avenue, Suite 1800
Miami, Florida 33131

1 
 

UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA 

 
 
  
SECURITIES AND EXCHANGE 
COMMISSION, 

 

  
Plaintiff, Civil Action No. 

  
v.  

  
BRASKEM, S.A.,  
  

Defendant.  
  
 

COMPLAINT 
 
 Plaintiff Securities and Exchange Commission (the “Commission”) alleges: 

SUMMARY 

1. This action arises from violations of the Foreign Corrupt Practices Act (“FCPA”) 

by Braskem S.A. (“Braskem” or the “Company”), a Brazilian petrochemical company.   

2. Beginning in at least 2006 and through approximately 2014, Braskem paid bribes 

to foreign political parties and foreign officials in the government of Brazil in order to assist 

Braskem in obtaining or retaining business in that country.  Braskem paid theses bribes through a 

complex web of international intermediaries and offshore bank accounts.  Certain senior 

Braskem executives authorized and approved these payments while knowing that all or a portion 

of the funds would be passed onto foreign officials in the government of Brazil.   

3. Braskem made approximately $250 million1 in improper payments to an illicit 

network that its controlling shareholder operated and used to make improper payments during 

the relevant time period.  At least $75 million of the amount paid into the illicit network was 
                                                 
1 Unless otherwise indicated, all dollar amounts are represented in U.S. dollars. 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 1 of 15



2 
 

used for bribes that directly benefited Braskem.   

4. The bribes Braskem paid during the relevant time period went to various foreign 

officials in Brazil, including at least one official at Petróleo Brasileiro S.A. (“Petrobras”), the 

Brazilian state-owned petroleum company, senators and representatives of the Brazilian 

congress, and foreign political party officials with at least two leading political parties in Brazil. 

5. In exchange for the bribes, a government official at Petrobras intervened on 

Braskem’s behalf in connection with the pricing formula for a 2009 supply agreement for the 

purchase from Petrobras of naphtha, the raw material used in Braskem’s production of 

petrochemicals.  This favorable pricing formula reduced Braskem’s price of naphtha by 

approximately $94 million from approximately March 2009 until February 2014.   

6. Braskem also received several tax credits and benefited from other legislative 

measures over the relevant time period of time that allowed it to avoid approximately $187 

million in consolidated expenses and costs.  Finally, Braskem netted approximately $8 million 

when certain executives at the Company bribed officials in the Brazilian government, who used 

their influence with Petrobras to prevent Petrobras from terminating a joint venture agreement 

involving a polypropylene plant.  Petrobras’s continued involvement in the polypropylene plant 

made it more profitable for Braskem.   

7. The illicit payments were paid directly by Braskem, or by its Cayman Islands-

based subsidiary, Braskem Incorporated Ltd., to intermediaries disguised as export consulting 

companies using accounts in the U.S., among other jurisdictions.     

8. Braskem and its subsidiary, at the direction of these senior executives, created 

false books and records to conceal the bribe payments.  These payments were improperly 

recorded as legitimate commission expenses in Braskem’s books and records and were 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 2 of 15



3 
 

consolidated into Braskem’s financial statements.  Braskem’s internal accounting controls were 

inadequate because they failed to prevent such payments or detect red flags that should have 

alerted its employees that these payments, in whole or in part, were fictitious and used to bribe 

foreign officials.   

9. As a result of its conduct, Braskem violated Section 30A of the Securities 

Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78dd-1] when it authorized or paid bribes 

to foreign political parties and foreign officials in the government of Brazil to influence their 

decisions securing improper advantages or to induce them to use their influence to affect the acts 

or decisions of a foreign government or instrumentality in order to assist Braskem in obtaining or 

retaining business.  Braskem violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 

78m(b)(2)(A)] when it created false books and records to conceal the bribery scheme.  Braskem 

also violated Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)] by failing to 

have sufficient internal accounting controls in place to detect and prevent the authorization of the 

illicit payments over an extended period of time.      

10. Braskem is reasonably likely, unless restrained and enjoined, to continue to 

engage in the acts and practices set forth in this complaint, and in acts and practices of similar 

purport and object.  

JURISDICTION AND VENUE 

11. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 

27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].   

12. Braskem has shares registered with the Commission pursuant to Section 12(b) of 

the Exchange Act and files periodic reports with the Commission.  The shares registered are 

represented by American Depositary Receipts that are traded on the NYSE under the symbol 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 3 of 15



4 
 

BAK.  Braskem’s shares were registered with the Commission pursuant to Section 12(b) of the 

Exchange Act [15 U.S.C. § 781].  As such, Braskem was required to file reports, including Form 

20-F, with the Commission pursuant to Section 13(a) of the Exchange Act [15 U.S.C. § 78m], 

and the related rules thereunder, and was an “issuer” within the meaning of the FCPA [15 U.S.C. 

§ 78dd-1, et seq.]. 

13. Braskem, directly or indirectly, made use of the means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange in 

connection with the transactions, acts, practices, and courses of business alleged in this 

Complaint.   

DEFENDANT 

14. Braskem S.A. is a company headquartered in São Paulo, Brazil that produces 

petrochemical and thermoplastic products.  The Company is the largest producer of 

thermoplastic resins in the Americas and the only producer of ethylene, polyethylene, and 

polypropylene in Brazil.  As of 2015, Braskem had approximately 8,000 employees and 

approximately $47 billion reais in net sales.   

RELATED ENTITIES 

15. Odebrecht S.A. (“Odebrecht”) is a privately-held company based in Brazil that 

indirectly owned approximately 38% of Braskem’s outstanding share capital and approximately 

50.11% of the Company’s voting share capital directly or through a wholly-owned subsidiary 

during the relevant time period.  Odebrecht is the holding company of a conglomerate engaged in 

engineering, oil and gas, real estate development, and other ventures.  Odebrecht’s then chief 

executive served as Chairman of Braskem’s board of directors during the relevant time period 

and played a key role in Braskem’s involvement in the illicit bribery scheme alleged herein. 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 4 of 15



5 
 

16. Petróleo Brasileiro S.A. (“Petrobras”) is an integrated energy company based in 

Rio de Janeiro, Brazil with operations in about 28 countries.  The company had securities 

registered with the Commission, represented as American Depositary Receipts, which are traded 

on the NYSE under the symbol PBR.  As of December 31, 2015, the Brazilian federal 

government held approximately 3.74 billion of the more than 7.4 billion Petrobras outstanding 

common shares (or approximately 50.5%).  As such, Petrobas was a state-owned enterprise and 

its employees are “foreign officials” under the FCPA [15 U.S.C. § 78dd-1(f)(1)(A)].  Petrobras 

also owned approximately 36.07% of Braskem’s outstanding share capital and 47.03% of the 

Company’s voting share capital during the relevant time period. 

17. Braskem Incorporated Ltd. is a wholly-owned operating subsidiary of Braskem 

based in the Cayman Islands. 

FACTUAL ALLEGATIONS 

 A. The Illegal Payment Scheme 

18. Beginning in approximately 2006, senior Braskem executives authorized and 

directed the payment of bribes to foreign officials in the government of Brazil.  As a result, 

Braskem secured an improper advantage in order to obtain or retain business in Brazil.   

19. The bribery scheme used a complex network of offshore shell companies, bank 

accounts located in traditional tax havens, individual currency dealers, and off-book financial 

accounts in order to make improper payments to government officials, political parties, and 

improper political campaigns contributions in Brazil.  Former senior executives at Braskem 

diverted Braskem funds into Odebrecht’s off-book accounts in or around 2006 to make these 

illegal payments to foreign officials in the government of Brazil for the benefit of Braskem in 

Brazil.    

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 5 of 15



6 
 

20. At the time, Odebrecht was Braskem’s controlling shareholder and had the power 

to appoint or designate, and did appoint or designate Braskem’s CEO and CFO.  Then senior 

Braskem and Odebrecht executives during the relevant time period approved the funds that 

Braskem diverted through Odebrecht’s off-book accounts. 

21. Braskem, directly or through its subsidiary, diverted funds into the Odebrecht’s 

off-book accounts by fabricating commission and making payments into offshore bank accounts 

controlled by three shell companies.  The shell companies then facilitated the transfer of the 

Braskem money into the Odebrecht off-books accounts that could then be used to make the 

improper payments. 

22. Between approximately 2006 and 2014, Braskem diverted approximately $250 

million into the Odebrecht off-book accounts in order to facilitate bribe payments to officials in 

the government of Brazil to benefit Braskem in Brazil.  Specifically, Braskem paid 

approximately 87.5 million reais (valued at approximately $26 million presently) to one shell 

company formed in June 2006 (referred to as “Consultant A”).  Braskem paid 272.2 million reais 

(valued at approximately $81 million presently) to another shell company also formed in June 

2006 (referred to as “Consultant B”).  Braskem also paid an additional 18.5 million reais (valued 

at approximately $5.5 million presently) to Consultant A and Consultant B.   

23. Additionally, Braskem Incorporated Ltd. paid $1.9 million to Consultant A, $2 

million to Consultant B, and $10.5 million to a third shell company (referred to as “Consultant 

C”) during the relevant time period.   

24. The invoices these shell companies delivered to Braskem typically identified the 

amount due as “commissions on the amount FOB exports to your various customers…” during a 

certain period of time.  The invoices further referred to an export agency agreement.  However, 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 6 of 15



7 
 

no export services were required for the customers or products involved in these dealings.  

Additionally, no valid agency agreement existed.  Thus, no commissions were ever incurred or 

due on the exports or for the customers identified in the invoices.  As a result, these invoices bore 

no relation to any legitimate services that these entities rendered.   

25. Braskem’s payments to Consultant A and Consultant B were improperly recorded 

in at least 926 general ledger entries at Braskem as Commissions Payable.  Braskem 

Incorporated Ltd.’s payments to Consultant A, Consultant B, and Consultant C were improperly 

recorded in at least 14 general ledger entries as Commissions Payable.  Braskem Incorporated 

Ltd.’s payments were paid in U.S. dollars and, in some instances, through financial institutions in 

the U.S. and its books and records were consolidated in Braskem’s financial statements filed 

with the Commission. 

26. In all, Braskem, directly or through its subsidiary, paid approximately $250 

million into Odebrecht’s off-book accounts.  Former senior Braskem executives were aware at 

the time they approved the payments that the funds paid to Consultant A, Consultant B, and 

Consultant C would be passed, in whole or in part, on to government officials in the government 

of Brazil, including the Petrobras and Brazilian party officials referred to in this Complaint.     

  a. Braskem’s illegal payments to Petrobras officials relating to a  
   polypropelyne plant located in Paulinia, Sao Paulo (Brazil) 
  
27. In or around 2005, Braskem and Petrobras executed an agreement for a joint venture 

between Petrobras and Braskem to build a plant.  Due to public pressure, senior Braskem executives 

feared that Petrobras intended to terminate the agreement even though early termination of the 

agreement would have required Petrobras to pay Braskem an early termination penalty.   

28. At least two former senior Braskem executives met with Petrobras’s chief 

downstream officer (“Brazilian Official A”) and a Brazilian congressman (“Brazilian Official 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 7 of 15



8 
 

B”).  Brazilian Official A and Brazilian Official B demanded that Braskem pay them, and 

Braskem did pay them, approximately $4.3 million in exchange for their influence to prevent 

Petrobras from terminating the agreement.  The direct financial benefit to Braskem by avoiding 

the early termination of this agreement was approximately 27 million reais (valued at 

approximately $8.4 million presently). 

29. Braskem paid all of the approximately $4.3 million in bribes through Odebrecht’s 

off-book accounts.  Braskem mischaracterized the payments in its books and records as 

Commissions Payable even though at least two of its then senior executives knew these funds 

were reasonably likely passed through to foreign officials in Brazil.  These payments were 

consolidated in Braskem’s financial statements as legitimate business costs or expenses.  As a 

result, Braskem did not, in reasonable detail, accurately and fairly reflect these payments in its 

books and records. 

  b. Braskem’s illegal payments to Petrobras officials relating to  
   the 2009 naphtha supply agreement 
 
30. In or around 2008, Petrobras and Braskem began negotiating with Petrobras for a 

supply agreement for the sale and acquisition of naphtha, a derivative from crude oil Braskem 

uses in its petrochemical production.  Braskem is Brazil’s largest consumer of naphtha and 

purchases approximately 70% of its demand from Petrobras, the only Brazilian supplier of 

naphtha.  

31. At and before this time, Petrobras determined the price for naphtha by using the 

international market price for naphtha + $2.  The international market price of naphtha is 

historically linked to the Amsterdam-Rotterdam-Antwerp market price of naphtha (typically 

referred to as “ARA”) and to the fluctuating reais/U.S. dollar exchange rate.  In 2008, Petrobras 

wanted to negotiate long term supply contracts directly with petrochemical companies such as 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 8 of 15



9 
 

Braskem.   

32. In or around late-2008, a former senior Braskem executive met again with 

Brazilian Official A and Brazilian Official B to negotiate a long-term naphtha supply agreement 

between Braskem and Petrobras. 

33.   The former senior Braskem executive agreed to pay, and Braskem did pay, 

Brazilian Official A and Brazilian Official B approximately $20 million over time.  In return, 

Brazilian Official A and Brazilian Official B used their influence over the contract approval 

process at Petrobras to require that the  naphtha supply contract with Braskem use a pricing 

formula that reduced Braskem’s cost of naphtha.   

34. During the negotiations between Braskem and Petrobras from approximately 

November 2008 until Braskem and Petrobras signed the naphtha supply contract in July 2009 

(made retroactive to March 2009), Brazilian Official A represented Petrobras as its lead 

negotiator.   

35. Brazilian Official A also used his influence over Petrobras’s technical team and 

the Petrobras executive board to approve a supply agreement that reduced Braskem’s cost of 

naphtha by approximately $94 million from March 2009 through February 2014.  Petrobras 

terminated the contract in or around February 2014.   

36. During the relevant time period, Brazilian Official A met with former senior 

Braskem executives on an annual basis to confirm and authorize the bribe arrangement.  The 

intermediary also met directly, or through an employee, with another former senior Braskem 

executive to receive bank wire transfer information and to deliver wire transfer confirmations.   

37. Braskem paid all or a portion of the approximately $20 million in bribes through 

Odebrecht’s off-book accounts.  Braskem mischaracterized the payments in its books and 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 9 of 15



10 
 

records as Commissions Payable even though certain of its then senior executives knew these 

funds were reasonably likely passed through to government officials in Brazil.  These payments 

were consolidated in Braskem’s financial statements as legitimate business costs or expenses.  

As a result, Braskem did not, in reasonable detail, accurately and fairly reflect these payments in 

its books and records.  

  c. Braskem’s illegal payments to officials in the Brazilian   
   federal legislature relating to several legislative measures 
 
38. Beginning in or around 2006, senior Braskem executives agreed to pay bribes, 

and Braskem did pay bribes, to foreign officials in the government of Brazil in exchange for 

certain legislative measures that would benefit, and did benefit, Braskem.  The measures 

included, but were not limited to, passing a law allowing a tax credit for the purchase of naphtha 

and expanding the credit to other raw materials used in the petrochemical industry.   

39. For example, prior to 2005 Brazilian law did not allow companies to take any tax 

credit for the acquisition of naphtha.  In 2005, the Brazilian congress passed a measure into law 

that provided a 3.65% tax credit for the acquisition of naphtha.  In 2013, the 3.65% tax credit 

was expanded to include other raw materials Braskem acquired. 

40. As described herein, Braskem began diverting funds into Odebrecht’s off-book 

accounts through Consultant A, Consultant B, and Consultant C in or around 2006.  These funds 

were ultimately passed on to officials in the government of Brazil as part of the illicit bribe 

scheme described herein.  A portion of the funds passed through Odebrecht’s off-book accounts 

went to officials in the government of Brazil in exchange for the passing of the tax laws in 2005 

and 2013.   

41. Specifically, three former senior Braskem executives agreed to divert Braskem 

funds to two officials in the Brazilian senate and two Brazilian representatives in exchange for 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 10 of 15



11 
 

their influence to increase and extend the tax credit on naphtha to other raw materials that 

Braskem acquires in the general course of its business.  In all, Braskem illegally paid these 

officials approximately 6 million reais, or approximately $1.74 million in or around October 

2013.   

42. Moreover, a Braskem director instructed Braskem to divert approximately 100 

million reais, or approximately $29 million, in funds through Odebrecht’s off-book accounts to 

officials in one of Brazil’s leading political parties to use their influence in order to assist in 

obtaining the result of increasing and extending the tax credit to include raw materials other than 

naphtha.   

43. Braskem’s financial benefit from the 2005 tax credit was approximately 62 

million reais, or approximately $19 million.  Braskem also saved approximately $168 million 

through the end of 2013 from the 2013 tax credit.   

44. The bribes paid to influence foreign officials to enact the tax credits were 

processed through Odebrecht’s off-book accounts as payments to Consultant A, Consultant B, 

and Consultant C, and recorded as Commissions Payable.  These payments were consolidated in 

Braskem’s financial statements as legitimate business costs or expenses.  As a result, Braskem 

did not, in reasonable detail, accurately and fairly reflect these payments in its books and records. 

 B. Lack of Compliance and Failure to Maintain  
  Adequate Internal Accounting Controls 
 
45. During the relevant time period, Braskem’s policies, procedures, or controls did 

not specifically address the FCPA.  For example, Braskem’s Code of Conduct during the 

relevant time period referred to employees’ relationship with clients and shareholders and 

governed the use of privileged information.  However, Braskem’s Code of Conduct in effect at 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 11 of 15



12 
 

the time failed to prohibit improper payments to foreign officials or political parties or reference 

the FCPA.   

46. Braskem had an ethics committee comprising four full members, including a legal 

representative, who decided matters relating to Braskem’s Code of Ethics and other policies.  

Braskem employees were encouraged to report potential misconduct by Company employees, 

third-party suppliers, and clients through an ethics line.  The allegations contained in this 

Complaint were never reported through Braskem’s ethics line or to its ethics committee even 

though the improper payments were significant over time and the approval of such payments 

involved certain senior Company managers who understood the purpose of the “commission” 

payments to the intermediary companies.  

47. Braskem’s procurement and accounts payable processes during the relevant time 

period lacked adequate payment approval standards and were easily manipulated by the senior 

executives.  For example, Company employees could manually add commission payments to 

third parties without verification of the existence of a contract.  The same employee that added 

the commission payment could then send the request for payment without the need for approval 

by a second employee.   

48. The improper payments to third-party agents such as Consultant A and Consultant 

B could have been prevented or detected if Braskem’s internal accounting controls had required 

the payments to be attached to a valid contract, which they did not.  In fact, Braskem did not 

have a valid agency or consulting agreement with Consultant A, Consultant B, or Consultant C.  

The improper payments to Consultant A, Consultant B, and Consultant C were made without the 

identification of a legitimate sale or a customer connected to the payment of the commission 

remitted.  As a result, Braskem’s limited internal procurement controls lacked the creation of 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 12 of 15



13 
 

records to provide reasonable assurances that payments were recorded as necessary to permit 

preparation of financial statements in conformity with generally accepted accounting principles 

in Brazil and the U.S. and failed to maintain accountability for its assets.                         

CLAIMS FOR RELIEF 

FIRST CLAIM 
 

Violations of Section 30A of the Exchange Act 
 

49. Paragraphs 1 through 48 are re-alleged and incorporated by reference. 

50. As described above, Braskem, through its officers, directors, employees, or agents 

corruptly offered, promised to pay, or authorized unlawful payments to one or more persons, 

while knowing that all or a portion of those payments would be offered, given, or promised, 

directly or indirectly, to foreign officials for the purposes of influencing their acts or decisions in 

their official capacity, inducing them to do or omit to do actions in violation of their lawful 

duties, securing an improper advantage, or inducing such foreign officials to use their influence 

with a foreign government or instrumentality thereof to assist Braskem in obtaining or retaining 

business. 

51. By reason of the foregoing, Braskem violated, and unless enjoined, will continue 

to violate, the anti-bribery provisions of the FCPA, as codified at Section 30A of the Exchange 

Act [15 U.S.C. § 78dd-1].  

SECOND CLAIM 

Violations of Section 13(b)(2)(A) of the Exchange Act 

52. Paragraphs 1 through 48 are re-alleged and incorporated by reference. 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 13 of 15



14 
 

53. As described above, Braskem, through its officers, agents, subsidiaries, and 

affiliates, failed to make and keep books, records, and accounts which, in reasonable detail, 

accurately and fairly reflected its transactions and dispositions of its assets.   

54. By reason of the foregoing, Braskem violated, and unless enjoined, will continue 

to violate, the books-and-records provisions of the FCPA, as codified at Section 13(b)(2)(A) of 

the Exchange Act [15 U.S.C. § 78m(b)(2)(A)]. 

THIRD CLAIM 
 

Violations of Section 13(b)(2)(B) of the Exchange Act 
 

55. Paragraphs 1 through 48 are re-alleged and incorporated by reference. 

56. As described above, Braskem, through its officers, directors, employees, or agents 

acting on its behalf, failed to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that: (i) payments were made in accordance with 

management’s general or specific authorization; and (ii) payments were recorded as necessary to 

permit preparation of financial statements in conformity with generally accepted accounting 

principles or any other criteria applicable to such statements, and to maintain accountability for 

its assets. 

57. By reason of the foregoing, Braskem violated, and unless enjoined, will continue 

to violate, the internal accounting controls provisions of the FCPA, as codified at Section 

13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that this Court enter a judgment: 

 A. Permanently restraining and enjoining Braskem, and its officers, agents, servants, 

employees, attorneys, and all person in active concert or participation with it who receive actual 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 14 of 15



15 
 

notice of this injunction by personal service or otherwise, from violating Sections 30A, 

13(b)(2)(A), and  13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78dd-1, 78m(b)(2)(A), & 

78m(b)(2)(B)]; 

 B. Ordering Braskem to disgorge ill-gotten gains, illegal losses avoided, and unjust 

enrichment obtained as a result of its illegal conduct;  

 C. Granting such other and further relief as the Court may deem just and appropriate; 

and  

 D. Retaining jurisdiction over this action in order to implement and carry out the 

terms of all orders and decrees that it may enter, or to entertain any suitable application or 

motion by the Commission for additional relief within the jurisdiction of this Court. 

Dated:   December 21, 2016   Respectfully submitted, 

      /s/ David S. Johnson     
      David S. Johnson 
      Assistant Chief Litigation Counsel 

D.C. Bar No. 477298 
SECURITIES AND EXCHANGE 
COMMISSION 

      100 F Street, N.E. 
      Washington, D.C. 20549 
      Direct Dial: (202) 551-2218 
      E-mail: [email protected] 
      

Ernesto Palacios 
      Senior Counsel, FCPA Unit 

Florida Bar No. 0529168 
Direct Dial: (305) 982-6306  

      E-mail: [email protected] 
      Attorneys for Plaintiff  
Of Counsel: 
 
Thierry Olivier Desmet 
Assistant Director, FCPA Unit 
Securities and Exchange Commission 
801 Brickell Avenue, Suite 1800 
Miami, Florida 33131 

Case 1:16-cv-02488   Document 1   Filed 12/21/16   Page 15 of 15