Reference no: EM133156711

Odebrecht operated by influencing politicians to award it construction contracts in exchange for campaign contributions or bribes. Brazilian authorities became aware of its illegal activities while they were investigating a corruption scandal focused on Petrobas, the state-controlled oil company. Odebrecht's senior managers found the bribery operation so complex that they set up a special division within the company to manage it. They named it the Division of Structured Operations. It included full time personnel and a separate accounting ledger and communication system. Tracking bribes to 12 governments involving 100 contracts required extensive internal controls.

The U.S. government took notice of the graft because Odebrecht used U.S. institutions in carrying out its illicit activities. The U.S. teamed with Brazilian authorities and Switzerland in investigating and ultimately prosecuting Odebrecht personnel. Odebrecht lost income due to the cancellation of contracts and the fine it had to pay. Other countries where it had bribed officials could still levy more fines. It could not pay its seven creditors and therefore filed for bankruptcy protection to restructure.

References

BBC. (2019, April 17). Odebrecht case: Politicians worldwide suspected in bribery scandal. Retrieved from https://www.bbc.com/news/world-latin-america-41109132

1. When working in a business culture permeated by corruption abroad, how could you enhance the probability that the foreign government would accept your proposal?
2. How can Odebrecht carry out convincing reforms and restore public confidence in the firm?
3. Imagine you are the judge at Odebrecht's bankruptcy trial. You believe Odebrecht should pay its creditors to the extent it can without total liquidation. Write an opinion expressing what you think would be fair to Odebrecht and its creditors.
4. Imagine you are president of Brazil. As president of you have political constituencies. Workers do not want to be unemployed. Brazil's state banks that lent heavily to Odebrecht want to be paid. Odebrecht would like to continue as a going concern. Write a press release explaining how you plan to manage these countervailing demands.