Justice Ministry Again Uses Money Laundering Laws to Indict Foreign Bribery Program – This Time in Brazil | Ballard Spahr srl



Indictment alleges international scheme involving bribes affecting correspondent bank accounts in New York

The US Department of Justice ad last week that UK law enforcement officials arrested, at his request, Austrian national Peter Weinzierl for his alleged involvement in a massive money laundering scheme involving previously Brazilian construction conglomerate Odebrecht SA Odebrecht pleaded guilty in December 2016 one count of violating the anti-corruption provisions of the Corrupt Practices Abroad Act (“FCPA”).

This arrest is accompanied by the unsealing of a indictment of the federal grand jury in the Eastern District of New York, accusing Weinzierl and the still on the run Alexander Waldstein of their alleged complementary roles in the program. Specifically, each man was charged with one count of conspiracy to commit money laundering and two counts of money laundering for international promotional purposes; Weinzierl was charged with an additional count of engaging in a transaction in criminal property.

According to the indictment, Weinzierl and Waldstein worked together as executives at an Austrian bank (identified in Press articles as Meinl Bank, later renamed Anglo Austrian AAB), and as members of the board of directors of an affiliated bank in Antigua. As such, they engineered back-to-back transactions that transferred over $ 170 million from New York bank accounts held by Odebrecht to Meinl Bank. The funds were then transferred from Meinl Bank via correspondent bank accounts in New York to offshore bank accounts at Bank of Antigua. These accounts were held by shell companies secretly controlled by Odebrecht. These transfers were accompanied by a) fraudulent “guarantee agreements” promising that Meinl Bank would provide specific financial services to Odebrecht subsidiaries, and b) equally fraudulent “transfer certificates” transferring this relationship to an allegedly unrelated third party. (in fact the accounts of the fictitious company).

Odebrecht allegedly used these off-book funds to pay bribes to domestic and foreign officials in the countries where he operated; the indictment specifically refers to government officials in Panama, Mexico and Brazil, with the implication that this is the tip of the iceberg. In a further feat of institutional pride, Odebrecht then recorded the transfers to Meinl Bank as “legitimate business expenses” and deducted them from the profits he declared to the Brazilian government, thereby reducing his overall tax liability and committing more than $ 100 million in tax evasion. In addition, some of the funds were returned to New York from the Bank of Antigua to a brokerage account, with the approval of Weinzierl and Waldstein, in order to purchase treasury securities, company stocks and bonds. in the US markets. For each of the transactions described, Weinzierl and Waldstein charged and collected substantial fees for the benefit of their Austrian and Antiguan banks.

Weinzierl and Waldstein’s indictment is just the latest example of a GM tactic we have blogged for several years: the DOJ’s increasing use of money laundering laws as a gap-filling measure to deal with cases beyond the technical scope of the FCPA. Although Weinzierl and Waldstein themselves did not pay bribes to foreign officials, they would have played full roles in the process of channeling Odebrecht’s profits to his slush funds. off books, which they knew to be the cash reserves of an international system of corruption. Money laundering laws allow the Department of Justice to prey on individuals like Weinzierl and Waldstein who would provide crucial logistical support to massive programs of this nature.

While Odebrecht’s previous plea means that Weinzierl’s cooperation in pursuing the business is unnecessary, past practice may indicate a likelihood that the DOJ could attempt to leverage Weinzierl’s cooperation to mount money laundering cases. money against corrupt foreign officials Odebrecht has filled the coffers of over the years – as well as bringing Waldstein to the United States to face charges.



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