Brazil’s Articles of Impeachment Implications to Operation Car Wash and the Economy Doug Doetsch Salim Jorge Saud Neto Partner Partner +1 312 701 7973 +55 21 2127 4210 ddoetsch@mayerbrown.com sjsaud@mayerbrown.com Kelly B. Kramer Partner +1 202 263 3007 December 10, 2015 kkramer@mayerbrown.com
Speakers Doug Doetsch Kelly B. Kramer Salim Jorge Saud Neto Chicago Washington DC Rio de Janeiro +1 312 701 7973 +1 202 263 3007 +55 21 2127 4210 ddoetsch@mayerbrown.com kkramer@mayerbrown.com sjsaud@mayerbrown.com 2
Operation Car Wash - 2014 March17 March 20 April 11 June 11 July 1 August 22 October November 14 December November 2nd Phase – 4th Phase – 6th Phase – 7th Phase – “Bidone” “Casablanca” “Bidone 3” “Doomsday” Alberto Alberto Alberto Petrobras Costa Costa Costa Costa Costa plea Costa plea Financial Financial arrested arrested bargain Statements again 1st Phase 3rd Phase 5th Phase Elections Congressional “Dolce Vitta” “Bidone 2” Committee Report Dilma Petrobras Rousseff + Health re-elected Ministry 3
2014 Elections Winning Ticket Vice-President Temer President Rousseff PMDB PT 4
Operation Car Wash - 2015 February March March April June July Sep Nov April Aug Nov 5 6 12 22 May 19 16 30 24 10 13 Sep 03 Nov Nov Aug Oct January February March April July 21 16 25 3 7 14 16 15 21 2 Cunha’s 13th 17th deposition Phase Phase 20th at CPI 9th Pixuleco Phase 11th 14th Phase Phase Phase 21st “My Way” Investigations Phase Marcelo 19th Health at Supreme Phase Odebrecht Cunha’s Ministry + Court Nessum Nessum arrested arrested Ethics Ethics Caixa Caixa 16th 16th Dorma Committee Phase Cunha defeats Proceeding PT candidate 12th Phase Corruption and is at Nuclear Speaker Vaccari Arrest of Power of the (PT Senator Company Cunha’s House treasurer) Delcidio Swiss arrested 15th Amaral Accounts New Phase + Congressional André Petrobras Investigation TCU Upstream Esteves Financial Commitee rejects Services Statements CPI Rousseff’s Industry 18th BRL6.2 Billion 8th Phase 10th Phase – accounting Phase losses for “Nestor Cervero” “What Country is for 2014 Pixuleco corruption this? II 5
Speaker of the House Eduardo Cunha PMDB 6
Impeachment Proceeding President Judgment at Dismissed suspended Senate Approved Impeachment Report Vote Defense request submitted to the submitted to the Speaker of the House Not guilty Guilty Election of Reporting Committe Rejected Removed and loses Returns rights Accepts the Impeachment proceeding Dismissed 7
Impeachment Proceeding Vote at the House of Representatives 512 representatives Defense 2/3 171 Votes 342 Votes 8
Impeachment Proceeding Vote at Senate 81 Senators Defense 2/3 27 Votes 54 Votes 9
Impeachment Proceeding Oct Dec Dec Dec Dec Dec Oct Sep 7 Dec 7 / 8 8 Dec Dec Dec 3 Dec 9 Oct 2 Dec 1 9 9 1 3 8 15 7 Mandamus TCU filed denies and appeal denied by STF PT decides to Reporter Updated Defense vote against of Cunha’s Request Request Cunha in Cunha in case removed case removed Vice-president submitted Ethics Impeachment Temer’s letter to STF Proceeding request Ethics President suspends officially Committee TCU Rousseff proceeding submitted considers rejects to the floor Rousseff’s requesting of the House accountability cautionary For 2014 removal of Election of Cunha Opinion in favor committee of impeachment Pro-government members Original Impeachment by House legal Leader Impeachment Date for Request department 272 v 199 of PMDB Request appointme nt Accepted Submitted removed of committee members 10
Supreme Court Decisions • Appropriate procedures for entire impeachment process – Appointment of Committee Members – Can the votes be secret? • Currently, proceeding is suspended until a decision by STF – Decision scheduled for December 16 • Decisions on status of Eduardo Cunha • Decisions on status of Eduardo Cunha 11
Has Operation Car Wash Lost Relevance? • No. It still attracts attention and enforcement authorities have been acting in the past few months in stealth • A number of companies have been negotiating leniency agreements • While CPI-Petro is finished, a number of authorities are still in the case, including against some of the main actors of the Impeachment proceeding proceeding 12
Operation Car Wash - 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 Brazilian Antitrust Authority • Proceedings against companies for corruption before the CGU – 29 proceedings • Improbity lawsuits against individuals and companies • Congressional Investigations Committee – CPI Petro 13
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 • Patrick Stokes, the Chief of the DOJ’s FCPA Unit, reportedly personally visited Brazil to meet with prosecutors DOJ is also assisting Brazil in tracing the proceeds of bribery DOJ is also assisting Brazil in tracing the proceeds of bribery • • US Private Securities Claims • Petrobras and Braskem have both been sued in class actions and opt-outs for securities fraud • Judge Rakoff has set the claims against Petrobras for trial in September 2016 14
Operation Car Wash – Status Globally • Global operation • Reportedly, around $30 million has been frozen in accounts held by Petrobras executives and Petrobras’ counterparties’ executives • Netherlands: • Reached $240 million settlement with SBM Offshore • Switzerland : Switzerland : • Swiss authorities are cooperating with Brazil and the US to trace money across the international banking system • Swiss authorities reportedly are providing Brazil with evidence of clandestine bank accounts, including accounts held by Congressman Eduardo Cunha 15
Operation Car Wash – Implications for Enforcement • Multi-polar enforcement is the new reality • Companies caught up in the Petrobras investigation face scrutiny in multiple countries (Brazil, Netherlands, Switzerland, US) • “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 initiative to monitor Brazilian • Brazil: CGU recently announced firms’ conduct outside of Brazil • UK: Successfully enforced UK Bribery Act 16
Impacts to the Economy • Operation Car Wash and Political Crisis have dominated the agenda in 2015 • Impeachment has shifted the focus from fiscal adjustments (approval of taxes and reduction of budget) • Markets reacted favorably the day after impeachment – Moody’s indicated possible downgrade – Moody’s indicated possible downgrade 17
Thank You For questions, please reach out to any of us: • Doug Doetsch, Partner +1 312 701 7653 +1 312 701 7653 ddoetsch@mayerbrown.com • Salim Jorge Saud Neto, Partner +55 21 2127 4210 sjsaud@mayerbrown.com • Kelly B. Kramer, Partner +1 202 263 3007 kkramer@mayerbrown.com 18
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