November 20, 2019 / 6:35 PM / 25 days ago

UPDATE 4-Ex-CEO of Brazil's Braskem arrested on U.S. corruption charges

(Adds plea entered by Grubisich)

By Brendan Pierson

NEW YORK, Nov 20 (Reuters) - The former chief executive of Brazilian petrochemical company Braskem SA was arrested on Wednesday in New York on charges that he took part in a scheme to pay millions of dollars in bribes to officials to secure government contracts.

Jose Carlos Grubisich was charged with conspiracy to violate a U.S. foreign corruption law and with a money laundering conspiracy in a newly unsealed indictment in federal court in Brooklyn.

Grubisich was arrested Wednesday morning at New York's John F. Kennedy Airport and entered a plea of not guilty in federal court in the afternoon, according to John Marzulli, a spokesman for the office of U.S. Attorney Richard Donoghue.

A hearing on whether Grubisich will be released on bail is expected at a later date, but has not yet been set.

Grubisich's lawyer, Daniel Stein of the firm Mayer Brown, could not be reached immediately for comment.

The prosecutors said in a court filing that Grubisich should not be released on bail because he poses a high risk of fleeing the country.

Grubisich led Braskem from about 2002 to 2008 and went on to hold various positions with its affiliated construction company Odebrecht SA. He later became CEO of pulp maker Eldorado Brasil Celulose SA, which he left in 2017.

In the indictment, prosecutors said Grubisich and other Braskem and Odebrecht employees took part in a conspiracy to divert about $250 million into a secret slush fund, which was used in part to bribe officials. The scheme ran from about 2002 to 2014, according to the indictment.

As CEO of Braskem, Grubisich helped cover up the scheme by falsifying the company's books and signing false certifications to the U.S. Securities and Exchange Commission, prosecutors said.

Braskem and Odebrecht agreed in 2016 to pay a combined $3.5 billion in a settlement with U.S., Brazilian and Swiss authorities to resolve bribery allegations.

The U.S. Justice Department said at the time that about $2.6 billion would come from Odebrecht and $957 million from Braskem, and that most of the money would go to Brazil. Both companies pleaded guilty to U.S. criminal charges as part of the deal, which emerged from a three-year corruption investigation in Brazil dubbed "Operation Car Wash."

The investigation, which centered on payments made to state-owned oil company Petróleo Brasileiro S.A., known as Petrobras, led to dozens of arrests and political upheaval in Brazil, contributing to the 2016 ouster of President Dilma Rousseff. (Reporting by Brendan Pierson in New York Editing by Marguerita Choy and Leslie Adler)

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