Background on Car Wash and Odebrecht's Role
Car Wash was the greatest investigation that took place in Brazil from March 2014 to February 2021. The investigation was conducted by the Brazilian Federal Police and initially focused on corruption, money laundering and bid-rigging schemes within the state-controlled Brazilian oil company Petróleo Brasileiro S.A. – Petrobras (“Petrobras”).
The operation reverted billions to the Brazilian public treasury and resulted in the arrest of high-level executives and significant Brazilian public figures. International cooperation with the
U.S. and Switzerland authorities was crucial in this highly complex and long-lasting scheme.
At the time, Odebrecht was the main Brazilian construction and engineering company playing a significant role in the scandal. The company engaged in widespread illicit acts, particularly corruption and money laundering, to secure lucrative contracts with Petrobras and with other governments. Odebrecht paid approximately $788 million in bribes in twelve different countries between 2001 and 2016. The investigation revealed a complex web of corruption involving top executives, politicians, and contractors in Brazil and outside of the country.
Odebrecht Plea Agreement
Odebrecht pleaded guilty before the U.S., Brazilian and Switzerland authorities for engaging in a large-scale, systematic scheme to pay bribes to government officials and politicians in several countries to secure business. For instance, some of the offshore entities used by the company to pay bribes were established, owned, and/or operated by individuals located in the U.S.
The plea agreement also revealed that Odebrecht had established a division within the company called the “Division of Structured Operations,” also known as the bribery department, to enable and conceal illicit activities.
This case highlighted the global reach of corruption acts and the significant role of international cooperation in addressing and prosecuting such practices.
Operation Spoofing and its impact on Odebrecht’s leniency agreement
In July 2019, the Brazilian authorities involved in Car Wash, including the former judge, Sergio Moro, and former Attorney General, Deltan Dallagnol, had their Telegram accounts hacked and messages leaked on a website. The messages showed the then-judge suggesting witnesses, dropping hints about future decisions, and advising prosecutors, including Deltan Dallagnol – which does not comply with Brazilian law, since judges are not allowed to advise parties involved in a case they are presiding over.
This cyberattack is part of an ongoing investigation by the Brazilian Federal Police called Operation Spoofing. Within the scope of this operation, in January 2020, the Brazilian Public Prosecutor’s Office indicted seven individuals for cybercrimes against Brazilian authorities, the practice of criminal organization and money laundering.
It also revealed that the hackers targeted individuals involved in the Odebrecht scandal, attempting to manipulate and leak sensitive information to undermine the company’s investigation in Car Wash. Additionally, it brought a controversial outcome regarding the electronic evidence obtained to execute Odebrecht's leniency agreement with Brazilian authorities.
The Brazilian Supreme Court decisions
In September 2023, Justice Toffoli declared null all evidence from Odebrecht’s leniency agreement obtained from the software systems Drousys and My Web Day B. According to the decision, due to procedural errors, such evidence was compromised and could not have been admissible in any judicial proceeding.
The main legal aspect that led to the inadmissibility conclusion by the Brazilian Supreme Court was the lack of records demonstrating that Brazilian authorities conducted the negotiations and exchanged information with the U.S. and Switzerland authorities under the official government channels, particularly for the purposes of receiving evidence from the Drousys and My Web Day B software systems.
Also, regarding the evidence gathered through these software systems, the decision pointed out that the data integrity was compromised since the Brazilian rules of chain of custody, Portaria SENASP N.º 82/2014, were not followed. For instance, the decision mentioned several times that the hard drivers containing Odebrecht’s files were transported in grocery bags without being under seal and that the drivers were accessed by the Brazilian authorities without taking data protective measures.
More recently, on February 1st, 2024, Justice Toffoli suspended Odebrecht’s payment of almost $2 billion in fines. This decision was issued after the company filed a petition seeking a reassessment of the terms of its leniency agreement for the correction of irregularities and abuses identified in Car Wash throughout Operation Spoofing.
Justice Toffoli argued that Odebrecht should gain full access to information obtained from Operation Spoofing to assess whether illegalities were indeed committed against the company.
The Supreme Justice also based his conclusion on the suspicion of collusion between the then- judge Sergio Moro and the prosecutors of Car Wash, as well as on the company’s financial and credit difficulties. Odebrecht filed for judicial recovery in June 2019 due to an estimated debt of $80 billion Brazilian Reais.
Odebrecht’s evidentiary reliability concerns and its potential impacts
It is no secret that multijurisdictional cases require extra attention regarding evidence. The authentication requirements of all potential jurisdictions must be met to guarantee there will not be inadmissible conclusions in the future by any of the authorities involved.
When dealing with electronic evidence demonstrating the integrity of the data is essential to ensure it remains unaltered or untainted in any manner that might compromise its reliability. The chain of custody is another critical aspect of forensic practice. Tracking every step taken from the moment the electronic evidence is collected, processed and analyzed – and from one person to another, ensures that nobody else could have accessed or possessed that evidence without authorization nor improperly tampered with it. Otherwise, the evidence may not be admissible in certain jurisdictions due to doubts about its genuineness.
That constituted the basis of Justice Toffoli's argument to declare null the electronic evidence obtained from the Drousys and My Web Day B software systems. According to his decision, the Brazilian rules of chain of custody, which required a track of every step taken from the moment the evidence was collected, were not followed by the authorities leading Car Wash.
However, his decision acknowledges that the evidence from these software systems was also authenticated through testimonials from the individuals involved in the wrongdoings, including members of the Division of Structured Operations and Odebrecht’s high-level executives.
This is a critical aspect of such a controversial decision, since the Brazilian legal proceedings laws allow authenticating evidence through testimonials. Although critical procedural errors were highlighted as the reason why the evidence could not have been admissible in any judicial proceeding, they were not identified as signs of spoliation.
The reassessment of Odebrecht’s leniency agreement may reverse potential charges against implicated individuals, and there may be a need for the Brazilian authorities to make restitution for amounts already paid by Odebrecht.
Moreover, these decisions may bring attention to Odebrecht’s plea agreement, since both software were the computer systems the Division of Structured Operations utilized to make illicit payments and conceal such activities. If this is the case, the U.S., Brazilian and Switzerland authorities may have to reunite for an international legal cooperation without precedent.
There is no official information publicly available until the date of this article on whether the U.S. and the Switzerland authorities will address the Brazilian Supreme Court decisions mentioned.
