The world's largest bribery ring

The network of this case spanned 12 countries on 4 continents, involving many Presidents, causing the US Department of Justice to issue the largest fine in history - 3.5 billion USD.

This week, the Brazilian newspaper Valor Economico reported that the head of Odebrecht, Latin America’s largest construction company, said he may have to file for bankruptcy. The company’s bonds have lost more than a third of their value this year, as investigations into the world’s largest bribery ring and record fines will leave it unable to repay its debts.

Odebrecht paid out nearly $800 million in bribes to individuals between 2001 and 2016. Odebrecht officials funneled the money around the world, from an anonymous bank account to politicians in dozens of countries, including the United States, Mexico, Venezuela, Colombia, Argentina, Peru, and Mozambique. In some cases, the bribes went through four anonymous bank accounts before reaching their destination.

Much of the money was used to win government contracts for roads, bridges, dams and highways. Investigators are also looking into whether it extended to construction contracts for the 2016 Rio Olympics and the 2014 World Cup.

Odebrecht is currently the center of the world's largest corruption ring. Photo: Reuters

A US court will decide this month whether Odebrecht must pay a record $3.5 billion fine announced last December. Odebrecht has pleaded guilty, but says it cannot afford to pay.

The fine is just the beginning of the financial fallout for Odebrecht. Several other Latin American countries are launching their own investigations, and more penalties are possible.

This is considered the most important corruption investigation in Latin American history. The first signs appeared three years ago, in another Brazilian investigation called Operation Car Wash with the national oil company Petrobras. It led to the arrest of a Petrobras executive. Petrobras also played a leading role in this corruption network.

The Petrobras and Odebrecht investigations have sent many prominent politicians and business leaders to prison in Brazil and are a major reason why Brazil is currently in its worst recession in history.

The investigation revealed that the scale of the network was global. Last month, Colombian President Juan Manuel Santos admitted that his 2014 re-election campaign received funding from Odebrecht. However, he said he did not know the source of the money and called for an investigation. Odebrecht also won contracts from the Colombian government.

In February, Peruvian police also searched the home of former President Alejandro Toledo on suspicion of taking bribes from Odebrecht. He denied this on Twitter. However, Toledo is now missing and could face jail time.

Former Brazilian President Luiz Inacio Lula da Silva is also facing jail time for allegedly taking bribes from Odebrecht to buy a vacation home for his family, and his successor, former President Dilma Rousseff, was impeached last year on separate charges.

Last week, former Brazilian House Speaker Eduardo Cunha was sentenced to 15 years in prison for his links to Petrobras and Odebrecht. Brazil has lost five cabinet members since President Michel Temer took office in May 2016, several of whom resigned over allegations of bribery from Odebrecht.

The company's leader, Marcelo Odebrecht, was sentenced to 19 years in prison a year ago. Odebrecht officials made a deal with investigators to reveal their names and details about the scheme in exchange for a reduced sentence.

Once this is done, many politicians in Latin America may go to jail. Latin American countries have a high rate of corruption. However, analysts say that this time they will be very strong. The reason is that the scale of this network is unprecedented. In addition, some Latin American countries have passed "corporate responsibility" laws.

This law makes it easier for investigators to charge entire companies, rather than individuals. It should make companies more willing to cooperate, since shareholders don't want to lose money.

Still, prosecutors must address the potential loss of thousands of jobs if Odebrecht goes bankrupt because of the large fines. It would affect not only the company’s workers but also the many partner companies that rely on Odebrecht across Latin America.

With many economies in the region struggling, Odebrecht is likely to be kept afloat. "Nobody wants Odebrecht to go bankrupt. The government wants to preserve jobs. They will survive, but there is no guarantee they will be as large as before," concluded Alexandre Garcia, director at Fitch Ratings Brazil.

According to VNE