The Washington State Investment Board’s case against Brazilian company Odebrecht in an effort to recover tens of millions of dollars lost in a bribery scheme was given a green light to proceed, according to a report from the Seattle Times.
The pension is suing because it purchased about $100 million worth of notes from four different offerings of Odebrecht Finance, totaling 163 million units of Odebrecht bonds with yields ranging from 4.375% to 8.25% between 2012 and 2015, the Times reported. The returns were impaired by Odebrecht’s nefarious activities involving hundreds of millions of dollars used to bribe officials to help the company win billions of dollars in government contracts.
According to court documents, Odebrecht admitted to using a business unit within Constutora Odebrecht – the “Division of Structured Operations” – to pay approximately $800 million in bribes in connection with 100 projects with 100 people in 12 countries in exchange for ill-gotten benefits of more than $3.3 billion.
Odebrecht accepted responsibility for these actions and pled guilty to the US Department of Justice so it would not file any additional criminal charges against Odebrecht and its subsidiaries and joint ventures.
The WSIB said that investments in Odebrecht appeared to be an attractive opportunity, and was wooed by the company’s financial statements, and its apparent prowess and ability to consistently and fairly win government contracts solicited through competitive bidding. WSIB claimed that had it known about the “massive bribery and kickback scheme,” it “would not have purchased the Notes, or at least not at the prices at which it paid,” WSIB said in a court filing.
“Unbeknownst to the public or the Company’s investors, the secret to Odebrecht’s success and its financial results was not its negotiating prowess or capabilities, but instead a massive bribery and kickback scheme involving hundreds of millions of dollars in illicit payments that it used to secure its government contracts,” the WSIB said.
It’s unclear how much the WSIB can expect to recover from the case at this time.
The pension recently announced the appointment of a new chief investment officer to replace Gary Bruebaker, who’s headed the board since the early 2000s. Allyson Tucker, currently serving as the head of the board’s Risk Management and Asset Allocation team, will assume her new role on January 1.
The WSIB did not respond to questions by press time.