U.S. GOVERNMENT PUBLISHING OFFICE

35–616PDF WASHINGTON : 2019

UNDERSTANDING ODEBRECHT: 

LESSONS FOR 

COMBATING CORRUPTION IN THE 

AMERICAS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

THE WESTERN HEMISPHERE, CIVILIAN SECURITY, 

AND TRADE 

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED SIXTEENTH CONGRESS 

FIRST SESSION 

TUESDAY, MARCH 26, 2019 

Serial No. 116–18 

Printed for the use of the Committee on Foreign Affairs 

( 

Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov, 

or www.govinfo.gov 
(II) 

COMMITTEE ON FOREIGN AFFAIRS 

ELIOT L. ENGEL, New York, Chairman 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

KAREN BASS, California 

WILLIAM R. KEATING, Massachusetts 

DAVID N. CICILLINE, Rhode Island 

AMI BERA, California 

JOAQUIN CASTRO, Texas 

DINA TITUS, Nevada 

ADRIANO ESPAILLAT, New York 

TED LIEU, California 

SUSAN WILD, Pennsylvania 

DEAN PHILLIPS, Minnesota 

ILHAN OMAR, Minnesota 

COLIN ALLRED, Texas 

ANDY LEVIN, Michigan 

ABIGAIL SPANBERGER, Virginia 

CHRISSY HOULAHAN, Pennsylvania 

TOM MALINOWSKI, New Jersey 

DAVID TRONE, Maryland 

JIM COSTA, California 

JUAN VARGAS, California 

VICENTE GONZALEZ, Texas 

MICHAEL T. MCCAUL, Texas, Ranking 

Member 

CHRISTOPHER H. SMITH, New Jersey 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

SCOTT PERRY, Pennsylvania 

TED S. YOHO, Florida 

ADAM KINZINGER, Illinois 

LEE ZELDIN, New York 

JIM SENSENBRENNER, Wisconsin 

ANN WAGNER, Missouri 

BRIAN MAST, Florida 

FRANCIS ROONEY, Florida 

BRIAN FITZPATRICK, Pennsylvania 

JOHN CURTIS, Utah 

KEN BUCK, Colorado 

RON WRIGHT, Texas 

GUY RESCHENTHALER, Pennsylvania 

TIM BURCHETT, Tennessee 

GREG PENCE, Indiana 

STEVE WATKINS, Kansas 

MIKE GUEST, Mississippi 

JASON STEINBAUM, Staff Director 

BRENDAN SHIELDS, Republican Staff Director 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE, CIVILIAN SECURITY, AND TRADE

ALBIO SIRES, New Jersey, Chairman 

GREGORY W. MEEKS, New York 

JOAQUIN CASTRO, Texas 

ADRIANO ESPAILLAT, New York 

DEAN PHILLIPS, Minnesota 

ANDY LEVIN, Michigan 

VICENTE GONZALEZ, Texas 

JUAN VARGAS, California 

FRANCIS ROONEY, Florida, Ranking 

Member 

CHRISTOPHER H. SMITH, New Jersey 

TED S. YOHO, Florida 

JOHN CURTIS, Utah 

KEN BUCK, Colorado 

MIKE GUEST, Mississippi 

SADAF KHAN, Staff Director 
(III) 

C O N T E N T S 

Page 

STATEMENTS SUBMITTED FROM COMMITTEE MEMBERS 

Prepared statement submitted by Chairman Sires .............................................. 3 

WITNESSES 

Camilleri, Michael, Director, Peter D. Bell Rule of Law Program, Inter-American Dialogue ........................................................................................................ 9 

Salazar, Katya, Executive Director, Due Process of Law Foundation ................ 17 

Hall, David L., Partner, Wiggin and Dana LLP ................................................... 24 

APPENDIX 

Hearing Notice ......................................................................................................... 44 

Hearing Minutes ...................................................................................................... 45 

Hearing Attendance ................................................................................................. 46 

RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD 

Questions submitted by Chairman Sires ............................................................... 47 

Questions submitted by Representative Rooney ................................................... 51 

(1) 

UNDERSTANDING ODEBRECHT: LESSONS FOR 

COMBATING CORRUPTION IN THE AMERICAS 

TUESDAY, MARCH 26, 2019 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON THE WESTERN HEMISPHERE, 

CIVILIAN SECURITY, AND TRADE

COMMITTEE ON FOREIGN AFFAIRS

Washington, DC 

The committee met, pursuant to notice, at 10:02 a.m., in Room 

2172 Rayburn House Office Building, Hon. Albio Sires (chairman 

of the subcommittee) presiding. 

Mr. SIRES. Good morning, everyone. This hearing will come to 

order. This hearing, titled ‘‘Understanding Odebrecht: Lessons for 

Combating Corruption in the Americas,’’ will focus on Odebrecht’s 

regional corruption scandal and U.S. policy options to support the 

fight against corruption in Latin America. Without objection, all 

members may have 5 days to submit statements, questions, extraneous materials for the record, subject to the length limitation in 

the rules. 

I will now make an opening statement before turning to the 

ranking member for his opening statement. 

Good morning, everyone. Thank you to our witnesses for being 

here today for a topic that extends across much of our hemisphere. 

Odebrecht is a Brazilian construction firm, but its name has become synonymous with one of the largest global corruption scandals in history. This web of bribery and money laundering with 

Odebrecht at its center has reached at least ten countries in the 

Western Hemisphere, brought down presidents, and shaken public 

confidence in government institutions. 

In 2016, Odebrecht and Braskem, a petrochemical company partly owned by Odebrecht, reached a plea deal with the U.S. Department of Justice. Under that agreement, Odebrecht agreed to pay at 

least $3.5 billion in penalties to resolve bribery charges in the U.S., 

Brazil, and Switzerland. It was the largest ever global bribery resolution in history. We know from the agreement that Odebrecht 

paid nearly $800 million in bribes from 2001 to 2016. However, this 

may be a low estimate. Countries like Venezuela have stifled efforts to investigate allegations linking government officials to corrupt payoffs. 

This scandal has rocked the political system of numerous countries including Brazil and Peru. Just last week, Brazil’s former 

president, Michel Temer, was arrested for accepting bribes and 

campaign contributions from Odebrecht and other firms. In Peru, 

virtually every major political leader has been tarnished by 

Odebrecht including the last four presidents. 
2 

In this hearing, we hope to better understand how this massive 

corruption scheme was executed. We will examine how Odebrecht 

attempted to buy off politicians from across the political spectrum. 

We will also look at how it moved money across borders using 

anonymous shell companies. A harsh reality is that dirty money 

from Odebrecht passed frequently through U.S. banking and financial systems. We must examine how we can do a better job in the 

future of stemming these illicit flows. 

We should also take this opportunity to assess U.S. policy and 

U.S. assistance programs to combat corruption in Latin America. 

Many governments and civil society organizations in the region are 

working hard to learn from cases like Odebrecht and prevent this 

from happening again. I believe the U.S. must be a reliable partner 

for those government officials seeking to root corruption and for the 

local organizations seeking to expose it. 

We should identify and support those who show the courage and 

political will to tackle this problem wherever it appears. As we look 

to the Fiscal Year 2020 budget, it is essential that we provide levels of foreign assistance funding that reflect our commitment to 

supporting a regional fight against corruption. We know that corruption erodes democracy, undermines the rule of law, and breeds 

citizen distrust and it is imperative that we work together to 

strengthen the region’s institutions. 

Democracy, human rights, and the rule of law should be at the 

center of our foreign policy. I look forward to hearing from the experts with us today about further steps the U.S. Government can 

take to help combat corruption in this hemisphere. 

Thank you, and I now turn to the ranking member for his opening statement. 

[The prepared statement of Mr. Sires follows:] 
3 

House Committee on Foreign Affairs 

Western Hemisphere Subcommittee 

Chairman Albio Sires (D-NJ) 

Opening Statement- "Understanding Odebrecht: Lessons for Combating Corruption in the Americas" 

Tuesday, March 26, 2019 

Good Morning everyone and thank you to our witnesses for being here today for a topic that 

extends across much of our hemisphere. 

Odebrecht is a Brazilian construction firm, but its name has become synonymous with one of the 

largest global corruption scandals in history. 

This web of bribery and money laundering with Odebrecht at its center has reached at least 10 

countries in the Western Hemisphere, brought down presidents, and shaken public confidence in 

government institutions. 

In 2016, Odebrecht and Braskem, a petrochemical company partially owned by Odebrecht, 

reached a plea deal with the U.S. Department of Justice. 

Under that agreement, Odebrecht agreed to pay at least 3.5 billion dollars in penalties to resolve 

bribery charges in the U.S., Brazil, and Switzerland. 

It was the largest-ever global bribery resolution in history. 

We know from that agreement that Odebrecht paid nearly 800 million dollars in bribes from 2001 

to 2016. 

However, this may be a low estimate. 

Countries like Venezuela have stifled efforts to investigate allegations linking government officials 

to corrupt payoffs. 

The scandal has rocked the political systems of numerous countries, including Brazil and Peru. 

Just last. week, Brazil's former President Michel Temer was arrested for accepting bribes and 

campaign contributions from Odebrecht and other firms. 

In Peru, virtually every major political leader has been tarnished by Odebrecht, including the last 

four presidents. 

In this hearing, we hope to better understand how this massive corruption scheme was executed. 

We will examine how Odebrecht attempted to buy off politicians from across political spectrum. 

Page 1 of2 
4 

We will also look at how it moved money across borders using anonymous shell companies. 

A harsh reality is that dirty money from Odebrecht passed frequently through the U.S. banking 

and financial systems. 

We must examine how we can do a better job in the future of stemming these illicit flows. 

We should also take this opportunity to assess U.S. policy and U.S. assistance programs to combat 

corruption in Latin America. 

Many governments and civil society organizations in the region are working hard to learn from 

cases like Odebrecht and prevent this from happening again. 

I believe the U.S. must be a reliable partner for those government officials seeking to root out 

corruption and for the local organizations seeking to expose it. 

We should identify and support those who show the courage and political will to tackle this 

problem wherever it appears. 

As we look to the Fiscal Year 2020 budget, it is essential that we provide levels offoreign 

assistance funding that reflect our commitment to supporting the regional fight against 

corruption. 

We know that corruption erodes democracy, undermines the rule of law, and breeds citizen 

distrust and it is imperative that we work together to strengthen the region's institutions. 

Democracy, human rights, and the rule of law should be at the center of our foreign policy. 

I look forward to hearing from the experts with us today about what further steps the U.S. 

government can take to help combat corruption in this hemisphere. 

Thank you, I now turn to the Ranking Member for his opening statement. 

Pagel of2 
5 

Mr. ROONEY. Thank you, Mr. Chairman. 

The Odebrecht bribery scandal is unprecedented in our hemisphere. It uncovered a systemic level of corruption that has reached 

every corner of Latin America and has led to the arrest and investigations of hundreds of public officials and businessmen in nearly 

a dozen countries. The scandal highlights the region’s ongoing 

struggle to combat corruption, but it also presents an opportunity 

for the United States and our regional partners to discuss meaningful public-private sector reforms and to improve anti-corruption 

mechanisms and strengthen democratic institutions. 

The Odebrecht scandal was discovered through the investigation 

known as Operacao Lava Jato, or Car Wash, which was initially 

launched by Brazilian authorities in March 2014 to uncover corruption within Brazil’s State-controlled Petrobras oil company. 

Odebrecht, a Brazilian construction company, was also discovered 

to be providing bribes for preferential treatment in awarded contracts. 

However, Odebrecht’s corruption knew no boundaries and extended far beyond Brazil, from Argentina to Mexico, and as far 

away as Angola and Africa. Lamentably, I have personal experience with witnessing their activities in Panama. Many jobs that me 

and my partners were going to pursue like Tocumen Airport, we 

dropped off as soon as Odebrecht joined the bid list. 

To date, we know that nearly 800 million in Odebrecht bribes 

have been accepted by government officials and candidates in ten 

Latin American nations. Through its in-house Division of Structured Operations—that is quite a euphemism—Odebrecht used 

bribes to secure construction contracts worth over $3 billion. Highlevel officials have been linked to Odebrecht scandals in Colombia, 

Mexico, and the Dominican Republic, including links to former 

presidents and vice presidents in Brazil, Peru, Argentina, Ecuador, 

and of course Mr. Martinelli in Panama. 

While no country or region of the globe is completely immune to 

corruption, the Odebrecht scandal highlights the pervasive corruption throughout Latin America which holds the region’s civil society, governments, and economies hostage. Corruption within the 

government and public sector of Latin America impedes regional 

growth, creates artificial economic barriers, and erodes public confidence in democratic institutions. Further, this corruption and its 

ruinous consequences are a main driver of regional migration in 

the narcotics trafficking which directly affects us here in the 

United States. 

While Latin America faces many challenges in rooting out corruption, many countries in the region have provided a framework 

for solutions in trying to solve their regional corruption issues. In 

Brazil, Transparency International, in consultation with public and 

private partners, has developed a package of reforms to include 

constitutional amendments, government institution reforms, and 

new rules related to corruption. Brazil’s Minister of Justice has so 

far incorporated a number of these reforms into draft laws. Similarly, Ecuador, Colombia, and Peru have all considered anti-corruption measures in 2018. 

I know that INCAE in Nicaragua and Costa Rica are working on 

things in connection with many of my associates in Panama to 
6 

strengthen institutions there which suffered great debility during 

the Odebrecht-Martinelli corruption times. The United States is 

also providing assistance to strengthen the institutional and technical capabilities of our regional partners to combat corruption. The 

State Department is working with the Department of Justice to implement programs such as the Criminal Investigative Training Assistance program and the Office of Overseas Prosecutorial Assistance and Training. 

I encourage our executive agencies to continue to work together 

and with our partners in Latin America to offer training and assistance to better practices and good governance and rule of law. 

I further encourage the exchange in posting of American officials 

throughout the region to assist in anti-corruption and to serve as 

a resource for the region’s governments, private sector, and financial institutions. 

Civil society also plays a critical role in demanding transparency 

and accountability in government, and I encourage continued support for strengthening civil society’s role in fighting against corruption. I commend our friends in the region who are taking meaningful steps in rooting out corruption and upholding the rule of law. 

I am especially encouraged by Brazil’s response to the Odebrecht 

scandal and by the activities that Panama is taking to try to address the time following the Odebrecht era there, and I support 

continued efforts to build off of these lessons throughout the region. 

I look forward to the testimoneys and opinions of all these important witnesses today and I want to thank Mr. Chairman Sires for 

holding this hearing. I yield back the balance of my time. 

Mr. SIRES. Thank you, Congressman Rooney. 

Let me introduce, first, Michael Camilleri, Director of the Peter 

D. Bell Rule of Law Program at the Inter-American Dialogue. He 

served from 2012 to 2017 as the Western Hemisphere advisor on 

the Secretary of State’s Policy Planning Staff and as Director for 

Andean Affairs at the National Security Council. 

Welcome to our hearing. 

We will then hear from Ms. Katya Salazar, Executive Director at 

the Due Process of Law Foundation where she has worked since 

2004. Under her leadership, the Foundation created the human 

rights and extractive industries program and became involved in 

the defense of the inter-American system of human rights. 

Thank you. 

Finally, we will hear from Mr. David L. Hall who is now a partner at Wiggin and Dana after more than two decades as a Federal 

prosecutor with the U.S. Department of Justice. At Wiggin and 

Dana he advises clients concerning the Foreign Corrupt Practices 

Act, the False Claims Act, and the cybersecurity and data privacy, 

including assessment of policies and procedures as well as data 

breach preparation and responses. 

I ask the witnesses, please, limit your testimony to 5 minutes 

and, without objection, your prepared written statement would be 

made part of the record. Thank you so much for being here today. 

Mr. Camilleri, you have 5 minutes. 
7 

STATEMENT OF MICHAEL CAMILLERI, DIRECTOR, PETER D. 

BELL RULE OF LAW PROGRAM, INTER-AMERICAN DIALOGUE 

Mr. CAMILLERI. Thank you. Mr. Chairman, Ranking Member 

Rooney, members of the subcommittee, thank you for the opportunity to testify today. I am honored to be here. 

Corruption represents an enormous obstacle to economic development and human rights across the globe and closer to home. It 

weakens democracies, facilitates drug trafficking and organized 

crime, breeds extremism and unrest, and prompt mass migration. 

It also creates an unlevel playing field for U.S. businesses as the 

ranking member referenced. 

For these reasons, I believe that combating corruption advances 

the U.S. national interest and a more free, secure, just, and peaceful hemisphere and world, and I commend the subcommittee for 

convening today’s hearing. 

Latin America, today, is with a few notable exceptions characterized by functional democracies. However, consolidating the rule of 

law is a consuming challenge and corruption remains pervasive. 

The Odebrecht case offers a singular opportunity to understand 

how corruption works in Latin America, why it happens, which 

countries are best equipped to combat it, and what the U.S. Government can do to help. My written submission to the subcommittee addresses all four of these issues in some detail. I will 

focus here on the role of the U.S. Government. 

First, the basics. Odebrecht admitted to the Department of Justice that it paid $788 million in bribes in ten Latin American and 

two African countries. Odebrecht’s bribery was not just widespread, 

it was systematic. The company’s secret Division of Structured Operations was set up specifically for this purpose. The bribes in 

question were often destined for political campaigns. 

From Brazil to Mexico, Venezuela to Panama, the Odebrecht 

schemes had a dual impact on citizens. Not only pilfering public 

funds for private use, but also distorting electoral processes 

through elicit campaign financing. The Odebrecht case reveals a series of structural weaknesses that allow corruption to flourish in 

Latin America. These include a permissive environment characterized by lack of accountability and specific challenges related to public contracting, campaign finance, and the role of shell companies 

and offshore accounts. 

The contrasting responses to the Odebrecht case are also revealing. In some countries, presidents, ministers, and CEOs went to 

jail; in others, investigations stalled. The judicial systems that enjoyed the greatest success were characterized by prosecutorial independence and political will, as well as technical capacity, effective 

use of tools such as plea bargaining, and a strong supportive role 

for civil society and the independent media. 

So what can the United States do to support Latin America’s 

anti-corruption fight? I will offer four recommendations based on 

lessons learned from the Odebrecht case. First, strengthen the Department of Justice’s mandate and capacity to combat foreign corruption. The Foreign Corrupt Practices Act is one of the most 

underappreciated sources of U.S. soft power in Latin America. Of 

course, the SFPA is designed to keep corporations with ties to the 
8 

U.S. out of the business of corruption. It does not aim to police the 

conduct of foreign officials. 

But when a citizen of Mexico or Argentina or Ecuador learns 

from a DOJ plea agreement that Odebrecht paid tens of millions 

of dollars in bribes to dirty politicians in her country, she wants to 

know who was on the receiving end of those bribes. I believe it 

should be the policy of the United States to help her find out. 

Second, support proven in-country accountability mechanisms. 

This can be as simple as a well-timed tweet or an appearance by 

the U.S. Ambassador at a high-profile trial. It includes maintaining 

U.S. backing for international cooperation mechanisms that have 

proven highly effective in supporting countries with fragile judicial 

systems, most notably CICIG in Guatemala. And U.S. foreign assistance programs should prioritize support for independent journalism and civil society watchdog groups. 

Third, maximize the impact of the Global Magnitsky Act. Staffing up the Treasury Department’s Office of Foreign Assets Control 

will help ensure that OFEC has the bandwidth to investigate and 

target both corrupt foreign officials and the networks surrounding 

them. 

And finally, lead by example. The U.S. leads best in our hemisphere when we lead by example. Unfortunately, in the past year, 

the United States dropped out of the top 20 countries on Transparency International’s Corruption Perceptions Index. One specific 

way in which the United States can do more here at home is by 

improving beneficial ownership transparency so that shell companies cannot be used to launder dirty money through the U.S. financial system. 

Thank you again for the opportunity to testify on this crucial 

issue. I look forward to your questions. 

[The prepared statement of Mr. Camilleri follows:] 
9 

Testimony of Michael J. Camilleri 

Director, Peter D. Bell Rule of Law Program, Inter-American Dialogue 

Hearing on "Understanding Odebrecht: Lessons for Combating Corruption in the Americas" 

House Committee on Foreign Affairs 

Subcommittee on the Western Hemisphere, Civilian Security, and Trade 

March 26,2019 

Chairman Sires, Ranking Member Rooney, and members of the Subcommittee, thank you for the 

opportunity to testify today on the Odcbrecht case and the lessons it holds for combating corruption in the 

Americas. 

The Inter-American Dialogue is a non-partisan think tank that has worked for over three decades to foster 

democratic governance, inclusive economic growth, and hemispheric cooperation in the Americas. As 

director of the Dialogue's Peter D. Bell Rule of Law Program, I lead our work on issues of transparency 

and anticorruption. A component of this work is an ongoing collaboration with the Inter-American 

Development Bank that gathers many of the leading anticorruption experts and practitioners to analyze and 

distill lessons from recent corruption scandals, investigations, and reforms in the region. Today's testimony, 

while reflecting my views alone, draws on this collective expertise. 

Why It Matters 

The World Bank calls corruption "public enemy number one" for the developing world. The United Nations 

observes that corruption represents an enormous obstacle to the realization of human rights, and that, 

unchecked, it can undermine the functioning and legitimacy of institutions, the rule of law, and ultimately 

the State itself. Indeed, national security leaders such as Gen. John Allen (retired) have called attention to 

the existential threat of rampant corruption. Across the globe and closer to home, corruption weakens 

democracies, facilitates drug trafficking and organized crime, breeds extremism and unrest, and prompts 

mass migration. 

For these reasons, I believe that combating corruption advances the U.S. national interest in a more free, 

secure, just, and peaceful hemisphere and world, and I commend the Subcommittee for convening today's 

hearing. 

Latin America today is, with a few notable exceptions, characterized by functional democracies that hold 

credible elections and govern through constitutional frameworks that enshrine individual rights and the 

separation of powers. Consolidating the rule of law, however, has proven perhaps the most stubborn 

institution building challenge since the region transitioned out of civil wars and dictatorships in the 1980s 

and 1990s. One consequence is the prevalence of corruption. While there is significant variation between 

countries, both grand corruption and petty corruption are common in Latin America. Transparency 

International's 2018 Corruption Perceptions Index assigns the region as a whole a failing grade. In fact, 

only three countries-Uruguay, Chile, and Costa Rica-receive passing grades. 

At the same time, there are signs of progress against corruption. Most countries in Latin America have 

access to information laws. Almost all of them have joined regional and global anticorruption treaties. ln 

response to recent scandals, some have sent presidents and CEOs to jail. Driving this change, 

fundamentally, is the mobilization of Latin American citizens themselves, with the international community 

playing a supporting role. Of course, the risk of backlash is ever present. Even in the wake of scandal, 

political elites often resist transparency reforms, sometimes for self-interested reasons, other times out of 

concern for political stability or economic development. These concerns are real, but for Latin America to 

thrive in the long run, it needs better politicians, not worse judges. Sustaining the anticorruption fight is 

crucial to the region's future and our relationship with it. 
10 

In this context, the subject of this hearing, the Odebrecht case, offers a singular opportunity to understand 

how corruption in Latin America works, why it happens, which countries are hest equipped to combat it, 

and what the United States can do to help. I will endeavor to address each of these issues, albeit in a 

necessarily simplified way. 

The Odebreeht Scandal 

Odebrccht, Latin America's largest construction firm, admitted in a plea agreement with the Department of 

Justice that between 2001 and 2016 it paid $788 million in bribes in ten Latin American and two African 

countries. During this time, its sales increased close to ten-fold. Odebrecht's bribery was not just 

widespread but systematic. In 2006 the company created a Division of Structured Operations (DSO), a 

stand-alone department with separate books and communications systems that was charged with vetting 

bribes and making transfers to offshore accounts. Through the DSO, Odebrccht perfected the science of 

bribe-giving, which became central to its business model and a principal driver of growth. Research by 

Chilean scholars Nicolas Campos, Eduardo Engel, Ronald D. Fischer, and Alexander Galetovic shows that 

the creation of DSO was followed by major increases in both sales and bribe payments. In fact, they 

conclude that all of the $2.4 billion in profit Odebrecht made during this period can be ascribed to bribery. 

The bribes in question were often destined for political campaigns, with some officials also benefitting 

personally. Essentially, Odebrecht's business model provided a mechanism for taxpayer funds to be 

funneled into campaign coffers via inflated public contracts. This took different forms. The plea agreement 

describes a case in which Odebrecht won a contract by directing more than $40 million to certain Brazilian 

political parties from the DSO. In Mexico, Odebrecht's country director admitted in a filmed confession to 

paying $10 million to a senior campaign aid to Mexico's future president Enrique Pefia Nieto (2012-2018), 

of which $4 million went to the campaign. In Venezuela, the payments went not to political parties but 

directly to those working on campaigns. According to press accounts of confessions obtained by Brazilian 

prosecutors, strategists for Hugo Chavez's 2012 reelection campaign were paid $7 million directly by 

Odebrecht and an additional $11 million in cash by Venezuela's then-foreign minister, Nicolas Maduro. 

The same strategists were employed via similar schemes in Panama and El Salvador. In all of these cases, 

the Odebrecht schemes had a dual impact on citizens-not only pilfering public funds for private use but 

also using these funds to distort electoral processes through illicit campaign financing. 

Structural Weaknesses 

The modalities of the Odebrecht case reveal a series of structural weaknesses that allow corruption to 

flourish in Latin America, and corresponding insights into what is required to combat corruption in the 

region. 

First, Odebrecht's systemic approach to corrupting public bidding processes across ten countries in the 

region could only have succeeded in a permissive environment. The company's approach assumed public 

officials would be willing to accept bribes, and it assumed also that auditors and prosecutors would not be 

capable of detecting and penalizing the schemes. Incentives were misaligned, with accountability virtually 

nonexistent. The sobering conclusion from the scope and modalities of the Odebrecht scandal is that grand 

corruption in much of Latin America remains pervasive and easy. 

Second, public procurement processes suffered from a very specific weakness. Research by Campos et al. 

sheds light on the role of contract renegotiations in Odebrecht' s modus operandi. They found that in the 

projects where Odebrecht paid bribes, renegotiations increased the value of investtnents by 71.3 percent, 

compared to just 6.5 percent in the projects where Odebrecht did not pay bribes. In many countries, 

infrastructure auctions were fairly competitive. The cost inflations that paid for bribes generally appeared 

2 
11 

later, at the renegotiation stage, when contracts were amended without the same level of transparency or 

public scrutiny. 

Third, shell companies and offshore bank accounts were fundamental to the work of the Division of 

Structured Operations, allowing Odebrecht's bribery scheme to be advanced by concealing and disguising 

corrupt payments to government officials and political parties. 

Fourth, Latin American political campaigns are bedeviled by dark money. Actual campaign costs often 

exceed formal spending caps by degrees of magnitude. In Mexico, a §!!!Qy by Mexicanos Contra Ia 

Corrupcion y Ia lmpunidad estimated that for every peso declared by a gubernatorial campaign, another 15 

pesos in undeclared money entered the campaign, and that these campaigns cost as much as ten times as 

much as the legal spending cap. In Argentina, a prominent investigative journalist found that in the 2016 

presidential election Mauricio Macri spent II times as much as he claimed to have spent, and his opponent 

Daniel Scioli spent almost 20 times as much as he declared. The problem, in general, is not campaign 

finance laws but their weak enforcement. Electoral authorities may review a campaign's official accounts 

for inconsistencies, but they lack the capacity or curiosity to contrast the campaign's declared receipts with 

evidence of its actual expenditures. The ability-and oftentimes the need-to secure large amounts of 

undeclared campaign cash to be competitive in Latin American elections incentivizes the kind of corruption 

witnessed in the Odebrecht case. 

Common Schemes, Contrasting Responses 

The fallout from the revelations in the Odebrccht plea agreement was swift and profound. Citizens across 

Latin America rightly clamored to know who amongst their public officials was on the receiving end of the 

bribes admitted by the company, and they demanded that these officials be held accountable. The scandal 

made heroes out of judges and even inspired a Netflix series. But while Odebrecht's corruption schemes 

and the public fury they engendered were common across the region, the resulting response has been far 

from uniform. In some countries, former presidents, ministers, and business tycoons went to jaiL In others, 

investigations barely budged. 

Analyzing Latin American countries' contrasting responses to the Odebrecht corruption revelations 

provides a telling window into the state of accountability efforts in the region. We can identifY at least five 

factors that appear to play an important role in explaining these differences. My focus here is on the actions 

of judicial systems, which is not to diminish the relevance of responses in other areas such as the approval 

of preventive measures by national legislatures. 

The first factor associated with positive accountability outcomes is prosecutorial independence and political 

wilL In cases that implicate powerful political and business figures, the independence and zeal of judges 

and prosecutors is a sina qua non. This is achieved in different ways by the countries that have shown the 

greatest progress in investigating Odebrecht, from the strong structural guarantees of independence that 

Brazilian federal prosecutors enjoy to the existence of an independent, UN-backed investigatory 

commission (CICIO) in Guatemala. In contrast, investigations in Mexico have advanced slowly. When a 

prosecutor began gathering evidence against the official accused of funneling bribes to the campaign of 

President Pefia Nieto, the prosecutor was fired by the presidentially-appointed attorney generaL Needless 

to say, Odebrecht investigations in Venezuela, where the judicial system is entirely coopted by the regime 

of Nicolas Maduro, have gone nowhere. 

Second, the innovative use of prosecutorial tools such as plea bargaining. Plea bargaining is an established 

tool in the United States and it is not without its critics, but it is virtually essential when investigating 

complex criminal structures such as the one revealed in the Odebrecht case. Plea bargaining was introduced 

to many Latin American legal systems more recently, and prosecutors in some countries have employed it 

3 
12 

more effectively than others. Here again, the work of Brazilian prosecutors stands out, while legal 

restrictions in other countries can tie prosecutors' hands; in Argentina, for example, a plea deal can only 

reduce a suspect's prison sentence by half. While Honduras was not impacted by the Odebrecht case, it is 

no stranger to grand corruption, and legislators there have repeatedly declined to approve a law introducing 

plea bargaining. 

Third, investigative capacity. The Odebrecht case requires investigators to analyze vast swaths of 

information and complex, transborder financial movements. Following the money in this case requires 

prosecutors and analysts to have both sophisticated training and adequate resources. The Brazilian federal 

prosecutor's office, for example, developed proprietary software to analyze the evidence it was collecting 

when an appropriate technological solution was not available on the market. At the same time, capacity 

alone is insufficient. Colombian prosecutors have benefitted from years of training and cooperation with 

the Department of Justice on complex organized crime cases, but investigations into the alleged $33 million 

in bribes paid by Odebrecht in the country appear to be stalled and focused on low-ranking figures. The 

reasons are unclear but the attorney general has come under scrutiny given his former role as counsel for 

Odebrecht's minority partner in Colombia (he has recused himself from the investigation). 

Fourth, international prosecutorial cooperation. At its core, the Odcbrecht case is an example of 

groundbreaking cooperation between the Department of Justice and its counterparts in Brazil and 

Switzerland that combined the unique leverage of each jurisdiction, including that ofU.S. prosecutors under 

the Foreign Corrupt Practices Act (FCPA). Investigators, especially those in the U.S. and Brazil, obtained 

extensive evidence of corruption implicating public officials in ten Latin American countries where 

Odebrecht admitted to paying millions of dollars in bribes. Prosecutors in the countries where bribery 

occurred have enjoyed differing degrees of success in obtaining this evidence, for reasons both justifiable 

(formal legal obstacles) and not (lack of interest). In Peru, for example, four former presidents are under 

investigation in the Odebrecht case, based in significant part on evidence developed by Brazilian 

prosecutors. In Argentina, in contrast, prosecutors spent years negotiating with their Brazilian counterparts 

about the terms of access to such evidence. 

Finally, the role of civil society and the independent media. In some countries, including Peru and Brazil, 

investigative journalists have enjoyed a symbiotic relationship with government investigators, sometimes 

breaking leads where prosecutors were stymied. In Mexico, transparency and human rights NGOs have 

teamed with the business sector to develop sophisticated proposals for enhancing government 

accountability and strengthening the independence of the public prosecutor's office. More broadly, civil 

society has played a role in shielding prosecutors from political pressure. This was certainly the case in 

Brazil, where judicial officials openly acknowledged the importance of public support for their efforts. It 

was also the case in Peru, where the attorney general was forced to back down after his recent attempts to 

dismantle the team investigating the Odebrecht case. 

Implications for U.S. Anticorruption Policy in Latin America 

The Odebrecht case offers several lessons for policymakers considering ways the United States can 

strengthen its anticorruption efforts in Latin America. The recommendations that follow focus on narrow 

takeaways from the Odebrecht case, and do not touch on the broader, commendable efforts of the U.S. 

government in areas such as judicial strengthening. 

1) Strengthen the DOJ's mandate to combat foreign corruption. 

The Foreign Corrupt Practices Act is one of the most underappreciatcd sources of U.S. soft power in Latin 

America. First and foremost, it is a preventive tool that extends transparency norms beyond our borders via 

the positive example of American corporations and the standard-raising long arm of U.S. jurisdiction. 

4 
13 

When violations of U.S. anticorruption statutes do occur, the work of the Department of Justice conveys a 

powerful message of accountability and rule of law. The case against Odebrecht is a prime example, as is 

the corruption case (based on RICO, fraud, and money laundering laws) against officials from FIFA, the 

world governing body for soccer. Citizens across the Americas differ on many things, but for the most part 

they love soccer and hate corruption. Enforcement ofFCPA and related statutes puts the U.S. government 

firmly on the side of Latin Americans who resent corruption and are directly or indirectly victimized by it. 

In this regard, the FBI's recent decision to set up a dedicated squad of FCPA agents focused on Latin 

America is to be commended. 

The FCPA is designed to keep corporations with ties to the U.S. out of the business of corruption; it does 

not aim to police the conduct of foreign officials. But when a citizen of Mexico or Ecuador or Argentina 

learns that Odebrecht paid tens of millions of dollars in bribes to dirty politicians in her country, she wants 

to know who was on the receiving end of those bribes. It should be the policy of the United States to help 

her find out. While the Department of Justice cannot simply make this information public for due process 

reasons, the FCP A Unit often takes impressive steps to facilitate foreign prosecutors' access to relevant 

evidence when legal and other circumstances allow. Nonetheless, this follow-on work is not strictly 

speaking within the mandate of FCP A enforcement, and both resources and incentives could be better 

aligned to encourage U.S. prosecutors to use the leverage provided by FCPA to obtain evidence against 

corrupt foreign officials, to deliver that evidence to trustworthy foreign investigators, and to help their 

foreign counterparts build their cases. As things stand, this cooperation is discretionary and often contingent 

on happenstance and personal networks. 

Strengthening such cooperation can be done in a few ways. Expanding the undersized FCP A unit with 

additional lawyers as well as support personnel such as financial analysts and translators would provide 

prosecutors greater freedom and capacity to assist their foreign counterparts. These resources could be 

shared with the DOJ's Kleptocracy Initiative, which has a complementary mandate, and paid for with fines 

collected under FCP A. Incentives such as awards could be granted not just for bringing successful cases in 

our domestic courts, but for helping foreign prosecutors convict the public officials who took the bribes. 

And with expanded staffing, a secondment system could be implemented so that members of the FCP A 

Unit could detail for short periods to foreign prosecutors' offices to help structure cases, train their 

counterparts, and where appropriate, share systems and software for analyzing evidence. 

2) Support proven in-country accountability mechanisms. 

Amid the disparate responses to the Odebrecht corruption revelations in Latin America, there are clear 

bright spots: vibrant civil society organizations, dogged investigative journalists, and capable and 

courageous judges and prosecutors. There is much the U.S. government can do to support those who are 

combating corruption in the region. 

The first is simply to be on the right side of the fight. A well-timed tweet or an appearance by the U.S. 

ambassador at a high-profile trial can provide encouragement and protection to local prosecutors and 

campaigners. The second is to maintain U.S. support for international anticorruption mechanisms that have 

proven highly effective in countries with fragile judicial systems, most notably CICIG, the UN International 

Commission against Impunity in Guatemala, which has helped build prosecutions in the Odebrecht case 

and many others. A similar OAS mission in Honduras (MACCIH) and a potential future mission in El 

Salvador (CJCJES) proposed by President-elect Nayib Bukele are similarly worthy of strong U.S. political 

and financial backing. Finally, the U.S. government can support independent journalism and civil society 

groups that document corruption and campaign for reform. In the Odebrecht case, these actors frequently 

developed leads and lines of investigation and stirred the public impetus for accountability. In countries 

where judicial systems are weak or coopted by political forces, their role is particularly critical. 

5 
14 

3) Maximize the impact of the Global Magnitsky Act 

T!te Global Magnitsky Act is one of the U.S. government's most powerful tools for combating corruption 

abroad, perhaps especially so in Latin America given the region's strong ties to the United States and the 

stigma that attaches when elites lose access to our country. Staffing up the Treasury Department's 

overburdened Office of Foreign Assets Control (OFAC) will maximize the impact of this tool and help 

ensure that OF AC has the bandwidth to investigate and target not just corrupt foreign officials but the 

networks surrounding them. Members of Congress can also contribute to Global Magnitsky enforcement 

by referring cases for OFAC review. 

4) Lead by example. 

The U.S. leads best in our hemisphere when we lead by example. This is especially true on rule of law 

issues. I know from my time representing the United States at the State Department and the National 

Security Council that any perceived U.S. hypocrisy is easily turned against us. It is not always fair, but it is 

a reality. The United States is often judged by a higher standard, and we should embrace this fact. 

Unfortunately, in recent years we have lost some of the high ground on combating corruption. The United 

States fell four points on Transparency International's Corruption Perceptions Index between 2017 and 

2018, and dropped out of the top 20 countries worldwide. This not only impacts the health of our domestic 

institutions, but also our ability to advance the national interest in combating corruption abroad. 

One specific way in which the United States can lead by example is by improving beneficial ownership 

transparency. Odebrecht employed a system of shell companies and offshore accounts to route money from 

its Division of Structured Operations to bribe recipients without detection. Anonymous companies facilitate 

corrupt financial transactions of this kind, and in fact were used in 70 percent of grand corruption cases 

reviewed by the World Bank. In this area the United States itself can do more. Transparency International 

notes that the U.S. has no federal law generally requiring legal entities to maintain beneficial ownership 

information. Ongoing bipartisan efforts to close this loophole should be prioritized. Doing so will not only 

make it more difficult for dirty money to be laundered through the U.S. financial system, but also put our 

diplomats in a stronger position to press other countries to do the same. 

6 
15 

Mr. SIRES. Thank you. 

Ms. Salazar? 

STATEMENT OF KATYA SALAZAR, EXECUTIVE DIRECTOR, DUE 

PROCESS OF LAW FOUNDATION 

Ms. SALAZAR. Thank you very much. Good morning and thank 

you again, Chairman Sires, Ranking Member Rooney, and members of the subcommittee for inviting me to testify this morning. 

As it was mentioned, the Odebrecht case represents maybe the 

largest transnational bribery scheme ever uncovered in Latin 

America. The case was a difficult blow for Latin America democracies and a challenge for its judicial institutions which were not 

well prepared to investigate and prosecute cases of this magnitude. 

But it was also important because it allowed us to understand how 

sophisticated criminal organizations operate in the 21st century. 

Latin America has robust international and national legal frameworks to combat corruption, so how could the Odebrecht scheme 

operate successfully for so many years? I will now present some 

lessons learned and recommendations arising out of this case. 

First, a strong legal framework alone is insufficient and State institutions must be able, in practice, to address the challenges presented by grand corruption, which means adapting institutional designs, policies, and methodologies to new realities, the realities of 

the criminal organizations in the 21st century. 

Second, judges and prosecutors in charge of these cases must be 

able to carry out their work with autonomy and free from undue 

interference either external or internal from within their own institutions. And this is still one of the most common problems in Latin 

America especially for highly sensitive cases. 

Third, the modus operandi that has been brought to light by the 

Odebrecht case shows that large corruption networks seek to control criminal investigations against them and thereby guarantee 

impunity for their illicit actions through the control of high-level 

justice sector authorities especially Attorneys General and the high 

courts. To this end, and this is very important, such networks exert 

their influence on the appointment mechanism of these officials 

which is much easier to do when the designations are in the hands 

of the political powers and have little transparency and citizen participation as counterbalance. 

In this context, I would like to emphasize the role of the Attorney 

General as a figure of fundamental importance in the fight against 

corruption in Latin America. It is, the Attorney General, it is an 

official with significant power, but also one extremely vulnerable on 

the face of influence of people and groups interested in shielding 

themselves from prosecution. In Latin America, most prosecutors 

are independent from the executive branch, but aside from—at 

least in theory. But aside from a few exceptions, the President and 

the Congress still have the almost exclusive power to appoint and 

remove the Attorney General. 

Again, with few safeguards to counterbalance this power, these 

decisions could be—and in many cases are—arbitrary and motivated by reasons other than strengthening the rule of law. The 

aforementioned does not discount the need for international support mechanisms to tackle grand corruption as occurred in Guate-
16 

mala and Honduras with CICIG and MACCIH, where there have 

been successes, but where the resilience of corrupt networks and 

their capacity to respond aggressively when their interests are at 

risk has also been put on display. 

Although there are many more lessons to be learned from this 

case, I have focused my comments on the role on the judicial systems, because in my opinion the best deterrent to the commission 

of corruption crimes is the successful prosecution of high-profile 

cases involving high ranking authorities. 

A few broad ideas about what the U.S. can do to support the 

fight against corruption in Latin America. First, through its foreign 

assistance, the U.S. Government should prioritize programs that 

support judicial independence, especially those oriented toward improving selection processes of high-level judicial authorities. U.S. 

diplomacy should also play a role in monitoring and making public 

statements on these issues when needed like it has done in Guatemala and in El Salvador. 

Furthermore, the U.S. should continue supporting investigative 

journalism in Latin America as well as civil society organizations 

throughout the region, leading the investigation of corruption 

cases, monitoring selection processes of high-level judicial authorities, and promoting institutional reforms. 

Finally, the U.S. must pay attention to the role of campaign financing and support strategic reforms in Latin America. True campaign finance reform is needed in the region to avoid repeating the 

history of Odebrecht. Thank you very much. 

[The prepared statement of Ms. Salazar follows:] 
17 

Katya Salazar 

House Committee on Foreign Affairs 

Subcommittee on the Western Hemisphere, Civilian Security, and Trade 

Understanding Odebrecht Lessons for Combating Corruption jn the Americas 

Public Hearing, Tuesday, 26111 March, 2019 

Executive Director, Due Process of Law Foundation (DPLF) 

The Odebrecht case represents one of the largest transnational bribery schemes ever uncovered 

in Latin America, in which at least 10 countries were involved {Argentina, Brazil, Colombia, 

Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Peru, and Venezuela). 

Odebrecht, a Brazilian company dedicated to multiple industries in Brazil and abroad including 

construction, energy and real estate, paid at least US $788 million in bribes to obtain multi-million 

dollar contracts from state-owned companies, between 2001 and 2016. Those payments were 

made through the company's Division of Structured Operations, which operated out of 

Odebrecht's accounting system and was dedicated to concealing, disguising and managing 

undocumented money to be used in improper payments to politicians, political parties and 

government officials throughout the region. The money was used mainly to support political 

campaigns and ensure the company undue advantages in future public biddings and contracts. 

The case was a difficult blow for Latin American democracies and a big challenge for its judicial 

institutions, which were not well prepared to investigate and prosecute cases of this magnitude 

and reach. But this case is also important because it allowed us to understand how sophisticated 

criminal organizations have become in the 21st century and the way they operate. We are not 

talking about mafia-type organizations with a unique boss and multiple operators, but a much 

more complicated network of people, frontmen, companies, off-shore entities, banks, government 

1 
18 

officials, judges, politicians, private operators, and others acting as a coordinated "operating 

system" designed to use state wealth for private gain. 

This case also touched upon a very sensitive topic, which is how political campaigns are funded. 

The Odebrecht case showed that national norms regulating private funding for political parties 

are outdated and need to be revised and fine-tuned. 

Latin America has robust international and national frameworks to combat corruption. In spite of 

that, the Odebrecht scandal occurred. What were the main factors that allowed this scheme -and 

others like it- to be carried out and to remain basically in impunity with few exceptions? What can 

we do? I will now present some ideas and lessons learned: 

First, a strong legal framework alone is insufficient. Judicial institutions should be designed to 

address the challenges presented by grand corruption. Specifically, it would be wise to strengthen 

the units or bodies in charge of the investigation, prosecution and adjudication of these crimes. 

These should be composed of specialized judges and prosecutors, with the support of other 

specialists in economics, finance, and social sciences - fields which are necessary to fully 

understand the functioning of structures as complex as those currently presented in cases of 

grand corruption. 

Second, judges and prosecutors in charge of the investigation, prosecution and adjudication of 

these crimes should be able to carry out their work with autonomy and free from undue pressure, 

conditions, or interference, either external or internal (that is, from within their own institution). 

This implies not only that these judges and prosecutors enjoy functional autonomy, including with 

regards to their superiors, but also that their work is protected with safeguards that prevent them 

from being unjustifiably removed from cases, fired without cause, transferred, or reassigned by 

government bodies for the purpose of hindering or delaying investigations. 

Additionally, it is necessary to implement protection mechanisms for judges and prosecutors who 

carry out investigations and legal processes regarding grand corruption, who need to adequately 

2 
19 

ensure their safety against possible threats and attacks on their lives and integrity, and that of 

their families. The investigations for which these prosecutors and judges are responsible often 

reach people and groups with economic and political power, who are part of organized criminal 

networks, and who can use threats and even carry out attacks against these justice sector officials 

in order to ensure their own impunity. Protection guarantees must be also be given to witnesses 

and collaborators. 

The modus operandi that has been brought to light by the Odebrecht case shows that large 

corruption networks seek to control the criminal investigations against them and thereby 

guarantee impunity for their illicit actions, through the control of high-level justice sector 

authorities, especially Attorneys General and the high courts. To this end, these networks exert 

their influence on appointment mechanisms, which is much simpler when the designations are in 

the hands of the political powers and have little guarantee of transparency and citizen 

participation. 

For this reason, in countries where corruption has reached structural levels and has permeated 

the political system, the political mechanisms of selecting high-ranking justice sector officials are 

a vulnerable point in the democratic system - because it is through these that corrupt groups 

exercise the influence that subsequently translates into impunity. It is therefore essential that 

mechanisms for the appointment of high-ranking judicial authorities have enhanced guarantees 

of transparency, meritocracy, and publicity, and that there be spaces for maximum citizen scrutiny. 

These same principles should apply regarding mechanisms for dismissal, especially when they are 

controlled by the political powers, because they can be used by corrupt operating systems to 

punish or fire those high officials who achieve significant advances in the investigation of their 

illicit actions. 

To be clear, the strengthening of appointment and removal mechanisms, and the allowance for 

broad citizen scrutiny at both stages, is crucial to diminish the possibilities of undue influence of 

3 
20 

corruption networks, and to permit those who accede to these positions to be well-qualified, 

capable individuals with the integrity and temperament to respect the law and pursue cases of 

grand corruption. 

The Attorney General is a figure of fundamental importance in the fight against corruption in Latin 

America. The leader of a highly hierarchical institution with the ability to give general instructions 

to prosecutors in charge of corruption investigations, and with the authority to personally take on 

cases of high social impact, the Attorney General is an official with enormous power, but also one 

extremely vulnerable in the face of the influence of people and groups interested in shielding 

themselves from prosecution. 

In Latin America, most prosecutors are independent from the executive branch, but aside from a 

few exceptions, the president and the legislature still have the almost exclusive power to appoint 

and remove the Attorney General. With few safeguards to counterbalance this power, these 

decisions could be -and in many cases are- arbitrary and motivated reasons other than 

strengthening the rule of law. 

Prosecutors' offices tend to be institutions with little transparency and little control and 

accountability mechanisms vis-a-visthe citizenry. This institutional culture, which also suffers from 

an absence of strategic planning in the identification of high impact cases and a lack of criteria 

for the prioritization of the most important investigations to dismantle corruption networks, 

means that the successes that some Latin American prosecutors have managed to obtain (for 

example, in Brazil, Peru and Guatemala) are still precarious, and that they may be insufficient to 

attack the very heart of criminal networks, much less dismantle them. 

In relation to the role of Attorneys General. the Odebrecht case has taught us important lessons: 

(i) that grand corruption networks are not indifferent to the election of Attorneys General; rather, 

they seek to influence such appointments, in order to have control over the investigations against 

4 
21 

them; but also (ii) that autonomous Attorneys General allow for independent investigations that 

can significantly undermine corruption networks. 

The aforementioned does not rule out the need for international support mechanisms to tackle 

Grand Corruption, as occurred in Guatemala and Honduras with CICIG and MACCIH, where there 

have been successes but where the resilience of corrupt networks and their capacity to respond 

aggressively when their interests are at risk has also been put on display. This shows that 

international cooperation and support is fundamental to attack grand corruption. 

Although most of my comments have focused on the role of judicial systems in combating grand 

corruption, there are of course other lessons to be learned outside of this area. But the role of the 

justice sector is particularly important because we do believe that the best deterrent to the 

commission of corruption crimes is the successful prosecution of high-profile cases. As long as 

citizens see that corrupt actors do not enjoy impunity, the incentives to engage in corruption will 

be weakened. 

5 
22 

Mr. SIRES. Thank you. 

Mr. Hall, 5 minutes. 

STATEMENT OF DAVID HALL, PARTNER, WIGGIN AND DANA 

LLP 

Mr. HALL. Thank you, Mr. Chairman. Chairman Sires, Ranking 

Member Rooney, and members of the subcommittee, thank you for 

the opportunity to appear today. 

On December 21st, 2016, Odebrecht and its petrochemical unit 

Braskem each entered a guilty plea to one count of conspiracy to 

violate the Foreign Corrupt Practices Act. The U.S. Government estimated that Odebrecht conspired to pay approximately $788 million in bribes in association with more than a hundred construction 

projects in 12 countries, mostly in Latin America. 

The global investigation of this scheme has ensnared almost a 

third of Brazil’s government ministers, two former presidents of 

Brazil, two former presidents of Peru, a vice president of Ecuador, 

and many, many others. This conspiracy is nothing short of astonishing in scale. If somebody wrote a movie about it, I would not believe it. And it is not a one-off event and it did not result from the 

actions of a few rogue employees or officials. It could hardly have 

been more systematic and sustained. 

The company, Odebrecht, actually created a bribery department, 

which was known as the Division of Structured Operations, for the 

specific purpose of operating the corrupt scheme and laundering 

money. The scheme came to light in 2014 after allegations of 

money laundering revealed that money dealers operating out of gas 

stations and car washes were working on behalf of an executive at 

Petrobras, the Brazilian petroleum corporation. 

Brazilian law enforcement initiated Operation Car Wash and discovered that Petrobras directors had been overpaying on contracts 

in order to fund kickbacks that were then deposited into a secret 

slush fund. This slush fund was used, in turn, to bribe politicians. 

Significantly, and unlike many FCPA cases prosecuted in the 

United States, this case originated from an investigation that 

began outside the United States by non-U.S. authorities. 

In the past, the U.S. often stood alone in its anti-corruption efforts, and as a result, other nations did not enforce similarly robust 

anti-corruption laws. Some believed that the FCPA placed U.S. 

companies at a disadvantage in global commerce compared to international competitors that were not similarly constrained in behavior and did not operate under the financial burden of FCPA compliance and recordkeeping requirements. 

All this might be changing. The Odebrecht case itself implies as 

much given the extensive and effective anti-corruption effort displayed by a magnitude of foreign nations. If these trends continue, 

it is good news for U.S. business operating on a global playing field 

because that playing field might become more level. 

There is much that the United States can do to take advantage 

of this momentum. For one thing, it can continue enforcing the 

FCPA against foreign corporations as well as domestic ones. But 

the degree of difficulty faced by U.S. enforcement and regulators in 

investigating conspiracies on foreign soil is very high. This is why 
23 

it is so important that foreign governments are increasing their efforts in anti-corruption enforcement. 

The United States can directly assist foreign authorities in anticorruption investigations and enforcement, and the best way to do 

this is to have U.S. investigators and prosecutors on the ground in 

foreign countries developing relationships with their foreign counterparts. This sort of integration can be accomplished by expanding 

the scope of attache programs such as those at the Justice Department, the FBI, and the Department of Homeland Security, as well 

as expanding the scope of other programs including State Department programs that have already been mentioned. 

The United States has long been at the forefront of prosecuting 

anti-corruption cases and is now presented with a new opportunity 

to partner effectively with foreign governments in enforcing anticorruption laws. Thus, the Odebrecht case might, with a little luck, 

portend the beginning of more effective and more fair global anticorruption law enforcement. Thank you very much for your attention and I look forward to your questions. 

[The prepared statement of David Hall follows:] 
24 

PREPARED TESTIMONY 

of 

David L. Hall 

Partner, Wiggin and Dana 

Before the 

Subcommittee on the Western Hemisphere 

Committee on Foreign Affairs 

United States House of Representatives 

"Understanding Odebrecht: Lessons for Combating Corruption in the Americas" 

Chairman Sires, Ranking Member Rooney, and Members of the Committee: 

Thank you for the opportunity to appear before you today for this hearing: "Understanding 

Odebrecht: Lessons for Combating Corruption in the Americas." 

My name is David L. Hall, and I am a partner at the law firm of Wiggin and Dana LLP. Prior to 

joining Wiggin and Dana, I served as an Assistant United States Attorney with the Department of 

Justice for 23 years. I am also a retired naval intelligence officer, having served in the Navy for 

thirty years, active and reserve. 

Opening Remarks 

On December 21, 2016, Odebrecht S.A. and its petrochemical unit Braskem S.A., each entered a 

guilty plea in the Eastern District of New York to one count of conspiracy to violate the Foreign 

Corrupt Practices Act ("FCP A"). 1 In the charging Information, the government alleged that 

Odebrecht conspired to "corruptly provide hundreds of millions of dollars in payments and other 

things of value to ... foreign officials, foreign political parties, foreign political party officials 

and foreign political candidates to secure an improper advantage" and to influence those officials 

and parties "in order to obtain and retain business in various countries around the world."2 The 

U.S. Government estimated that Odebrecht conspired to pay approximately "$788 million in 

bribes in association with more than 100 projects in twelve countries, including Angola, 

Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, 

Panama, Peru and Venezuela." The global investigation into this scheme has ensnared almost a 

third of Brazil's government ministers; two former presidents of Brazil; the vice-president of 

Ecuador; a former vice-minister for transport and a former senator in Columbia; two expresidents in Peru, and over seventy executives at Odebrecht, among others. Odebrecht agreed 

to pay a criminal penalty of$2.6 billion and Braskem agreed to pay a penalty of over $632 

million.3 

The Odebrecht bribery conspiracy was astonishing in scale. And it not a one-off event, nor did it 

result from the actions of a few rogue employees or officials. It could hardly have been more 

1 The respective plea agreements are available at https://www.justice.gov/opalpress-release/file/919916/download; 

https://www.justice.gov/opalpress-release/file/919906/download. 

2 In addition to the plea agreements, the Odebrecht charging Information (available at 

httos://www.justice.gov/opalpress-release/file/919911/download) contains an extensive factual recitation of the 

scope and nature of the Odebrecht bribery scheme. 3 Supra notes I & 2. 
25 

systematic and sustained. The company actually created what was essentially a bribery 

department, known ominously as the "Division of Structured Operations," for the specific 

purpose of executing the corrupt scheme. This division of the Company acted like any 

traditional criminal conspiracy by operating in secret-- including using codenames and bespoke 

software and communications systems. Yet, in others ways, it acted like a traditional business 

division, using spreadsheets and payment management platforms, to track and manage the 

payment of bribes around the world. 

The Division of Structured Operations also engaged in extensive money laundering, paying 

bribes by funneling money through a variety of offshore entities, utilizing smaller banks located 

in countries with strict banking secrecy laws, including Antigua and Panama. Using these funds, 

Odebrecht would rig bids, influence public projects for its own benefit, avoid repercussions from 

problems encountered on construction projects, and secure public contract work around the 

world. As the scheme grew, members of the conspiracy actually purchased a branch of an 

Austrian bank located in Antigua. Using this captive branch, corrupt officials could open an 

account and receive payments directly. 

The Odebrecht Investigation 

The scheme began to come to light in 2014 after allegations of money laundering revealed that 

money dealers operating out of gas stations and car washes were working on behalf of an 

executive at Petrobras, a petroleum corporation largely owned by the government of Brazil. 

Brazilian law enforcement initiated Operation Car Wash (Lava Jato) and discovered that 

Petrobras directors had been overpaying on contracts to fund kickbacks that were deposited in a 

secret slush-fund controlled by those directors. By following the path of the money, 

investigators discovered that that slush fund was used to bribe the politicians who had appointed 

the Petrobras directors to their positions and to fund their own election campaigns. 4 

The investigation would eventually implicate those at the highest levels of Brazil's 

government. In 2018, former President Luiz lnacio Lui ada Silva started serving a 12 year prison 

sentence following his 2017 conviction for corruption and money laundering.5 On March 21, 

2019, former President Michel Temer was arrested on bribery charges relating to $472 million in 

kickbacks related to construction projects.6 

A key factor in the success of investigators in identifying the depth and breadth of this corrupt 

scheme was a recent change in Brazilian law, allowing prosecutors to offer leniency in exchange 

for a defendant's cooperation. This new tool, combined with an increased use of"preventive 

detentions," which kept suspects in custody pre-trial, allowed investigators to elicit cooperation 

4 See Mimi Whitefield, Brazil Engu!fod in a Corruption Scandal with Plots as Convoluted as a Telenove/a, available 

at httos:/ /www .miamiherald.com/news/nation-world/world/americas/article 171222962.html. 5 https://www .cnn.com/20 17/07/12/americas/brazil-lula-da-silva-conviction/index.html; 

https://www.cnn.com/2013/08/05/world/americas/luiz-inacio-lula-da-silva-fast-facts/index.html 

6 https:/ /www .nytimes.com/20 19/03/21/world/americas/michel-temer-arrested-prisao.html; 

https://www.reuters.com/article/us-brazil-corruption/brazils-former-president-michel-temer-arrested-sourceidUSKCNIR21JW 
26 

from suspects, including conducting sting operations such as one that captured a recording of a 

corrupt senator offering to arrange ajailbreak.7 

As the nature of the corrupt scheme was revealed, investigators uncovered evidence that 

Odebrecht, Latin America's largest construction firm, had been involved in Petrobras' contract 

over-pricing and kickback scheme. In June 2015, Brazilian law enforcement arrested 

Odebrecht's CEO Marcelo Odebrecht, along with three other high level executives. In March of 

2016, Marcelo Odebrecht was sentenced to 19 years in prison for paying more than $30 million 

dollars in bribes to Petrobras executives. 8 Subsequently, Marcelo Odebrecht cooperated with 

prosecutors in an effort to reduce his sentence. 

The Brazilian Federal Police continued to investigate Odebrecht and, despite efforts to destroy or 

conceal evidence, gained access to an e-mail account used by an Odebrecht executive who 

worked in the Division of Structured Operations, which lead to a trove of hard copy spreadsheets 

detailing the Division of Structured Operation's activities. By following the investigative 

threads that started in a car wash, Brazilian authorities were able to discover a global network of 

corruption.9 

Despite the magnitude of this scheme, its connections to the United States were, by comparison, 

relatively limited. As set forth in the charging Information, some of the entities used by the 

Division of Structured Operations were "established, owned and/or operated by individuals 

located in the United States," certain members of the conspiracy conducted meetings on U.S. 

soil, and some payments were disbursed from U.S. based bank accounts. Significantly, 

Odebrecht owned 50.11% of the voting shares and 38.1% of the total shares ofBraskem S.A., a 

petrochemical company headquartered in Sao Paulo, Brazil. Shares ofBraskem were traded on 

the New York Stock Exchange and Braskem was required to file annual reports with the SEC. 

Braskem was, thus, an "issuer" as defined by the FCPA and, unsurprisingly, did not disclose the 

benefits it received from participating in the Odebrecht bribery scheme to its investors or to U.S. 

regulators. 

Global Changes in Combating Corruption 

Significantly, and unlike many FCPA cases prosecuted in the United States, the Odebrecht case 

originated from an investigation outside of the United States conducted by foreign authorities. 

Typically, FCPA prosecutions and enforcement actions arise out of investigations initiated and 

conducted by U.S. law enforcement. This makes sense historically, given the leadership of the 

United States in the fight against global corruption- starting with the enactment of the FCPA. 

But, in the past, the United States often stood alone in its anti-corruption efforts. Other nations 

did not have or enforce similarly robust anti-corruption laws. Compounding this problem, 

7 See Dilma RousseffLuiz Imicio Lula da Silva, Operation Car Wash: Is this the biggest corruption scandal in 

history, available at httos://www.theguardian.com/world/20 1 7/jun/0 1/brazil-operation-car-wash-is-this-the-biggestcorruption-scandal-in-historv. 

8 See Brazil Petrobras scandal: Tycoon Marcelo Odebrechtjailed, available at https://www.bbc.com/news/worldlatin-america-35753774. 

9 See Michael Smith, Sabrina Valle, and Blake Schmidt, No One Has Ever Made a Corruption Machine Like This 

One available at https://www .bloomberg.com/news/features/20 17 -06-08/no-one-has-ever-made-a-corruptionmachine-like-this-one. 
27 

cooperation from the international community was often limited as those countries sought to 

protect their own companies from the reach of U.S. extraterritorialjurisdiction. 10 Given the 

United States' aggressive position on anti-corruption, some believed that the FCPA placed U.S. 

companies at a disadvantage in global commerce, compared to international competitors that 

were not similarly constrained in behavior, and that did not bear the financial burden of FCPA 

compliance and record keeping requirements. Thus, concluded the critics, the FCPA- as 

laudable as its goals are-- has disadvantaged U.S. business in global markets. 11 

This might be changing. The Odebrecht case itself implies as much, given the extensive anticorruption effort exerted by a multitude of foreign nations. In addition, anti-corruption laws are 

changing in many other nations. For example, India recently amended its Prevention of 

Corruption Act to target bribe-givers, who could previously only be prosecuted indirectly 

through the Act's abetting provisions. 12 Thailand has amended its anti-corruption laws, bringing 

the country's anti-corruption regime in line with the 2003 UN Convention Against Corruption. 13 

In 2015, South Korea enacted its Improper Solicitation and Graft Act, which specifically 

prohibits certain categories of gifts to "public officials." 14 France's newly passed Sapin II bill 

brings that country's anti-corruption regime closer in line with that of the U.S. and the U.K. 15 

If these trends continue, it is good news for U.S. businesses as the global playing field will 

become more level. 

Continuing the Fight 

There is much the United States can do to take advantage of this momentum. For one thing, it 

can continue enforcing the FCPA against foreign companies as well as domestic ones. A review 

of the largest FCPA penalties imposed by the U.S. government shows that the majority of the 

largest fines have actually been imposed against non-U.S. companies. 16 In pursuing these types 

of enforcement actions, the United States can hope to induce foreign companies to implement 

and enforce robust anti-corruption policies and, thus, play by the same set of rules as U.S. 

companies. 

10 See International Business Transactions Committee the Association of the Bar of the City of New York, The 

FCPA and its Impact on International Business Transaction, available at 

https://www2.nycbar.org/pdf/report/uploads/FCPAimpactonlnternationalBusinessTransactions.pdf. (noting the 

difficulty in securing cooperation from other countries, and discussing the possible factors which can shape a 

country's anti-corruption policies). 

'' See Rachel Brewster, J:.liforcing the FCPA: International Resonance and Domestic Strategy, I 03 Va. L. Rev. 

1611, 1628 (20 17) (discussing the reactions to the passing of the FCPA and its potential effect on businesses 

abilities to compete internationally). 12 Calvin Chan & Jun Yi Ho, Significant Updates to India's Anti-Corruption Law, available at 

https://www.reedsmith.com/en/perspectives/2018/IO/significant-updates-to-indias-anti-corruption-law. 

13 Anti-Corruption in Thailand: new amendment strengthens rules on corporate bribery, available at 

https://www.nortonrosefulbright.com/knowledge/publications/90774c33/anti-corruption-in-thailand-newamendment-strengthens-rules-on-corporate-bribery. 

14 Catherine E. Palmer, Daiske Yoshida & Junyeon Park, Expansive Korean Anti-Corruption Law Comes into Force, 

available at https:/ /www .lw.com/thoughtLeadership/L W -korean-anti-corruption-law-comes-into-force. 15 Alexandre Bailly & Xavier Haranger, Sapin 11 Law: The New French Anticorruption System, available at 

https://www.morganlewis.com/pubs/sapin-ii-law-the-new-french-anticorruption-system. 

16 Brewster, supra note 9, at Table I. 
28 

Still, the degree of difficulty faced by U.S. law enforcement and regulators in investigating 

clandestine conspiracies on foreign soil is high. This is why it is so important that foreign 

governments are increasing their efforts in anti-corruption enforcement. We could be at a pivotal 

moment giving rise to a unique opportunity to increase cooperation with foreign anti-corruption 

authorities. Using the Odebrecht case as a framework, we can see what the U.S. role in assisting 

anti-corruption enforcement internationally might look like. 

As a threshold matter, the United States can assist other nations in implementing an effective 

anti-corruption regime by enacting robust anti-corruption laws. The United States can encourage 

this in a number of ways including providing assistance in drafting legislation and developing 

effective enforcement mechanisms. The United States can also directly assist foreign authorities 

in anti-corruption investigations and enforcement. Again, the Odebrecht case provides a good 

e~ample of how international law enforcement cooperation can be mutually advantageous. What 

started as a money laundering investigation involving car washes and gas stations turned into the 

largest international corruption case in history. Foreign law enforcement agencies exhibited a 

high- and highly commendable- degree of competence and tenacity in this investigation. U.S. 

law enforcement authorities, accustomed to taking the lead in this type of investigation, can 

themselves benefit from working with such skilled partners. The United States can also assist by 

providing training on how to conduct effective corruption investigations. As illustrated by 

Odebrecht's bespoke software platforms used to manage its Division of Structured Operations 

and its efforts to destroy or conceal evidence, cutting edge investigative tactics will be vital in 

pursuing sophisticated anti-corruption prosecutions in the future. The United States is in a 

position to use its knowledge and resources to help foreign law enforcement agencies analyze 

international commercial and banking transactions, and help unravel the tangled pathways that 

bribes can travel. 

By working with other countries to enforce their own anti-corruption policies, the U.S. also 

increases the likelihood of success in domestic prosecutions under the FCPA. As the Odebrecht 

case demonstrated, it is possible that a corrupt scheme originating abroad might use the U.S. 

banking system, involve U.S. based partners, or otherwise implicate companies subject to U.S. 

laws and regulations. But the best evidence of these U.S.-based criminal activities might 

actually be located overseas. The best way to gather this evidence is to have U.S. investigators 

and prosecutors on the ground in foreign countries developing relationships with their foreign 

counter-parts. This sort of integration can be accomplished by expanding the scope of attache 

programs such as those of the Justice Department, the FBI, and the Department of Homeland 

Security. 

The United States has long been at the forefront of prosecuting anti-corruption cases, and is now 

presented with a new opportunity to partner effectively with foreign governments in enforcing 

anti-corruption laws. Thus, the Odebrecht case might- with a little luck -portend the beginning 

of more effective and fairer global anti-corruption law enforcement. 

Thank you for your attention. 
29 

Mr. SIRES. Thank you, Mr. Hall. 

Before we question, I would like to recognize the former chairman of the Western Hemisphere Subcommittee, Connie Mack, who 

is in the audience today. We worked very well together when he 

was chairman, from Florida. 

You know, this is a topic of interest to me for many years, the 

corruption in the Western Hemisphere. I really think that some of 

these countries have been set back for so many years because of 

the constant corruption that you read about it. So, when I came to 

Congress and tried to encourage attention to the Western Hemisphere and tried to encourage people to have money to help some 

of these countries because they really do need it, the question of 

corruption always surfaces. 

Why should we give money to countries that are so corrupt that 

the money that we give them may not go to the initial plan that 

we originally want it to? And, you know, it is a tough question to 

ask when you try to increase funding for these countries, and then 

we have this huge corruption case with Odebrecht. 

Mr. Camilleri, I am interested in how these bribes made it 

through the banking of the United States and how was it that they 

were able to do this and it took us so long to pick up on this. Can 

you answer that? 

Mr. CAMILLERI. Thank you, Mr. Chairman, and thank you for 

your longstanding interest and concern for this issue and for convening the hearing. 

There were, within the Odebrecht conspiracy, acts that took 

place on U.S. soil. Those included meetings of Odebrecht executives. It included money that found its way into our financial system. Odebrecht, however, was pretty systematic about how it used 

this Division of Structured Operations to have the bribes paid and 

did things, for example, like acquiring a bank on a small Caribbean 

island which it used in order to deposit many of these payments 

into the bank accounts affiliated with the corrupt politicians they 

were looking to pay off. 

So while some of the money did find its way into the U.S., much 

of it was routed elsewhere. The issue that I mentioned in my testimony is an important one. Beneficial ownership transparency is 

critical to allowing the law enforcement to scrutinize these financial flows, and it will, I think, just as importantly put the United 

States in a much stronger position to then go to other countries 

where this sort of thing is happening and ask them to take the 

same steps that keep shell companies, in order to keep shell companies from being used as a route for illicit financial movements. 

Mr. SIRES. Thank you. I am concerned that this administration 

and previous administrations really did not speak up strongly 

enough on some of these issues in some of these countries. 

For example, Ms. Salazar, can you speak to the fact that CICIG 

was kind of pushed out of Guatemala and what are the repercussions of that? 

Ms. SALAZAR. Well, thank you. This is a very important question, 

Mr. Sires, because CICIG was a very important institution, not just 

for Guatemala but for the whole region for two main reasons. First 

of all, because it helped Guatemala to uncover these criminal organizations networks and how they operated, but they also showed 
30 

the region that it is possible to do something to fight against corruption, to prosecute the corrupt. 

From the perspective of a Latin American expert on judicial reform, I have to say that I felt very disappointed for the decision of 

the U.S. Government to, you know, not give an unconditional support to CICIG. It was really sad. 

As you know, the head of the CICIG is living in New York right 

now and the CICIG will finish its mandate at the end of the year. 

And we expect that the U.S. Government can reflect about the lessons learned of the CICIG because there are other similar initiatives moving around the region. In Ecuador, the President of Ecuador, for example, has offered to create a similar institution. In El 

Salvador, the new President has offered to create also a kind of 

CICIG. 

So I think it is important to take seriously the lessons learned 

from the CICIG and support it. In general, international corporation to combat corruption is a good idea. The bad idea is like thinking that there is a one-size-fits-all method, because we need to analyze what are the particularities of each country. But I think with 

all due respect that the U.S. Government should support these 

kinds of initiatives which bring international support to our countries. 

Mr. SIRES. Thank you. 

I now recognize the ranking member, Congressman Rooney. 

Mr. ROONEY. Thank you, Mr. Chairman. You know, I have been 

doing business around the world since 1975 in my family companies and when the FCPA came in we did not think much of it. It 

added a lot of complexity to our work in many parts of the world, 

but I have got to tell you, reading this stuff and hearing this testimony and watching the Odebrecht thing impact in Latin America, 

makes me really appreciate one of the subsidiary roles of the FCPA 

was to attack the culture of corruption. Not just specific instances, 

but the culture of corruption. 

And I just wonder, Mr. Hall and Mr. Camilleri, you know, Brazil 

is known for the jeito and the culture of corruption and how does 

that kind of culture contribute to what Odebrecht did and some of 

their competitors, who I am not going to mention right now, and 

how will that culture impede the Brazilian Government’s efforts to 

improve things now? 

Mr. HALL. Thank you, Mr. Rooney. 

I think it is clear that a culture of corruption is what leads to 

the criminal behavior. And in the case of Brazil, I would say that 

the Odebrecht case, what we have learned about that one conspiracy, the part that is public so far, demonstrates that that does 

exist. I think that one of the—and I say this as sort of a law enforcement traditionalist—is that one of the positive effects from law 

enforcement actions like this, and particularly effective multilateral 

law enforcement actions like this, is to create a deterrent effect and 

to change the standard. 

The problem with the culture of corruption is that it corrodes 

standards. It lowers them and it makes it seem OK to do things 

that people individually might understand is not the right thing to 

do, but it is the easy thing to do and I am probably going to get 

away with it. When law enforcement is effective in holding people 
31 

to a higher standard or holding companies and institutions and 

government agencies and government officers to a higher standard, 

it creates a deterrent but it also creates an incentive to hit that 

higher standard. 

Mr. ROONEY. Thank you, Mr. Hall. 

Mr. Camilleri? 

Mr. CAMILLERI. Thank you, Congressman. The Odebrecht case 

could only have happened in a culture of pervasive corruption. You 

only set up a dedicated bribe unit and pay hundreds of millions of 

dollars of bribes if you are pretty sure you can get away with it. 

This was not something that was exceptional that was a case of a 

few bad apples in the company. It was something that was premeditated, structured, systematic. 

So, I think your question goes to the heart of what the case revealed. In terms of how it might be changing, I think, and very 

much consistent with what Mr. Hall said, first of all, incentives are 

changing. The very fact that this case exists and the fact that prosecutors in many countries, not all in Latin America, have sort of 

taken up what the DOJ did and pursued the cases at the local 

level, creates a different set of incentives, so that is positive. 

We have heard anecdotally that business culture may be changing in some places, that the sting of the Odebrecht case is being 

felt and that the business community is pushing back against being 

shaken down for bribes. I think we will have to see on that, but 

it is positive that noises are being heard. 

And then the other piece of this obviously is political policy reform that is the preventive strengthening the frameworks and the 

enforcement mechanisms, and Katya spoke to this. I think, there, 

it is going to be more challenging, frankly. In Brazil, the current 

Justice Minister is former Judge Moro. He was kind of the hero of 

the Odebrecht case, the Lava Jato case at the local level. He has 

already had to water down the set of anti-corruption reforms that 

he presented to Congress because it is very hard it turns out to get 

the folks who are part of the system to then reform that system. 

So I think there is positive news, but also some wait and see and 

a lot we need to do to kind of stay on this issue. 

Mr. ROONEY. Thank you. 

Can I have one more little bit? 

To followup on what Mr. Hall and you said as well, Mr. Hall, 

about the—you mentioned DOS and DOJ programs. How would 

you assess the level of cooperation across the different programs in 

the U.S. Government and what things have been most effective? 

Mr. HALL. Of course I can only speak from my experience, and 

I should point out that I did retire from the government 5 years 

ago so maybe it is a little dated, but I did serve for 23 years. I had 

a lot of experience with international investigations and, generally 

speaking, I would describe the programs really as nascent. There 

are programs in place. I have seen them work very effectively in 

terms of training, in terms of advice. 

What I think we can do better is to actually integrate our, you 

know, operations with foreign law enforcement in a more sustained 

way than we do right now. Right now, based on my experience, it 

is very ad hoc. So, my experience would be I would have an investigation into a transnational crime and I would, you know, basi-
32 

cally establish a bilateral relationship with a counterpart in a foreign country and we would try to work together using, you know, 

our different sets of laws and try to merge them so that we could, 

you know, work effectively together. 

But it really was very ad hoc and, essentially, I was talking to 

a stranger. I was trying to make friends but we did not really know 

each other. What would be better would be to have more attaches 

on the ground, because the job of an attache is to establish those 

kinds of relationships so that when a field prosecutor like me 

shows up and says, here is what I want to do, the attache knows 

who to call. 

And I have seen that work well where there are attaches and 

particularly where there are good ones who really do have those 

kinds of relationships and really can make that work. 

Mr. SIRES. Thank you, Mr. Hall. 

Congressman Espaillat. 

Mr. ESPAILLAT. Thank you, Mr. Chairman, Ranking Member. 

So Brazil, Venezuela, the Dominican Republic, Panama, Angola 

and Argentina, Ecuador, Peru, Guatemala, Colombia, Mexico, Mozambique, and several other countries that allegedly have been involved in this major scandal. My first question is, are there any— 

Mr. Hall, this is to you. Are there any current prosecutions, open 

prosecutions in the U.S. Federal system of cases, directly connected 

to the Odebrecht case? 

Mr. HALL. Since I am no longer with the government I do not 

actually know the answer to that authoritatively. My understanding is the answer to that is yes, is that the investigation is 

continuing. I am confident that—with what we have just seen with, 

you know, recent events in Brazil—that the investigation certainly 

is continuing overseas and my understanding is that it is here too. 

Mr. ESPAILLAT. So here in the U.S. circuits of Federal courts 

there are open investigations? 

Mr. HALL. Yes. And not anything that is charged, but my understanding is that the investigation does continue. 

Mr. ESPAILLAT. OK. My second question is we have seen what 

has happened with CICIG and MACCIH. Ms. Salazar, there seems 

to be a resistance in Latin America, because of the history of Latin 

America, outside groups coming in to tell locals what to do. I happen to think that in some of those countries there are many good 

people in the civil society that want to battle and combat corruption, nonpartisan people, people of goodwill, good government folks 

that want to really combat corruption. 

Do you have like a model, is there a model that functions sort 

of like outside of the CICIG/MACCIH structure that involves local 

people that could be impartial and really have ownership and skin 

in the game to combat corruption like the Odebrecht corruption in 

these countries? 

Ms. SALAZAR. Yes, Mr. Espaillat. And, actually, there are different models that can be used to support a particular country 

using international law and international mechanisms. CICIG and 

MACCIH are just one more, but there are many others promoted 

by United Nations, by the Organizations of American States, which 

includes a different level of international personnel and inter-
33 

national law or international mechanisms involvements. For example—— 

Mr. ESPAILLAT. But what about locally, because I think that—— 

Ms. SALAZAR. Yes. 

Mr. ESPAILLAT [continuing]. People see international entities or 

folks from outside the country as interventionists in some way. But 

I feel that in those countries there are good people that want to 

battle corruption. Is there a model that will bring in good folks that 

will combat—— 

Ms. SALAZAR. Well—I am sorry. Actually, in CICIG and MACCIH 

there are many local people. Not all of them are foreigners. So I 

mean, I do not think, I mean the leaders, the heads of the institutions—— 

Mr. ESPAILLAT. Right. The leadership, right. 

Ms. SALAZAR. The leadership maybe are people from other countries, but there are many locals in the institutions. But what I 

wanted to say again there are different models. There is not just 

one model that we need to apply. For example, and this is connected with what Mr. Hall say, there are countries where, you 

know, their general prosecutors’ offices have been opened to receive 

international cooperation, international legal assistance, people 

from abroad but work with the local. 

Mr. ESPAILLAT. Yes, but usually those local prosecutors’ office are 

appointed by the local government and they may themselves be involved in corruption. But what about having an entity, an impartial nonpartisan entity in a—is there anything that works out 

there? 

Ms. SALAZAR. For me, CICIG has worked. 

Mr. ESPAILLAT. OK. 

Ms. SALAZAR. For me, for example, the International Commission 

of Human Rights belonging to the Organization of American States 

has an initiative called Grupo de Expertos, group of experts, and 

they have created this group of experts to send to Nicaragua and 

to Mexico—— 

Mr. ESPAILLAT. OK. 

Ms. SALAZAR [continuing]. To analyze the case of the 43 students 

disappeared. These initiatives were a kind of combination—— 

Mr. ESPAILLAT. I see, thank you. 

Ms. SALAZAR [continuing]. And they work also. 

Mr. ESPAILLAT. I have one last question for Mr. Hall. You mentioned there was a bribery department, right, sort of like structure 

for this. Where was this department and who headed it? 

Mr. HALL. It was a department of Odebrecht and it was literally 

created for the purpose of organizing in a corporate way the payment of—— 

Mr. ESPAILLAT. Where was it based, yes? 

Mr. HALL. I believe in Brazil. 

Mr. ESPAILLAT. And who headed it? 

Mr. HALL. I do not know the answer to that. 

Mr. ESPAILLAT. OK. Thank you. 

Thank you, Mr. Chairman. 

Mr. SIRES. Congressman from Florida, Ted Yoho. 

Mr. YOHO. Thank you, Mr. Chairman. Thank you all for being 

here, I appreciate it. 
34 

And to me it is fascinating to see the level of corruption around 

the world, and I think a universal truth is all governments are 

made up of people one way or another and whenever people are involved there is always a level of corruption involved. And we can 

look at our own government in our own country, so we are not excluded from that. And it is just, the sad thing to me is that it robs 

the individuals in those countries of the resources of that nation, 

whether it is Maduro in Venezuela or in this case in Brazil, and 

I look over the years the level of corruption that goes on. 

And I read an article yesterday in the Wall Street Journal. It 

says since Brazil’s return to democracy in 1985 after a military dictatorship, four of the eight presidents who took office have now fallen afoul of the country’s law, either impeached for misconduct or 

arrested after leaving office. Mr. Temer’s arrest is further evidence 

of a crisis in Brazilian democracy according to Marcelo Freixo, a 

Member of Congress for the left-wing Socialism and Liberty Party. 

This is what I find interesting and I want to ask you if this is 

just the way business is. We cannot celebrate the arrest of another 

former president, he said. Corruption is structural and is embedded 

in the relationships between our institution. And I ask you, is this 

truly the norm for Latin America, Asia, Africa, or even the U.S.? 

Mr. Camilleri? Excuse me. 

Mr. CAMILLERI. Fourth time lucky, thank you, Congressman. 

Corruption certainly was structural in Brazil. I think that is what 

this case among others revealed. I think that has to do with different issues, some having to do with accountability and some having to do with the particular kind of coalition Presidential system 

that the Brazilians have, where essentially presidents are very 

weak and have to cobble together legislative majorities among a 

dozen or more parties and at first pork and later corruption became 

the currency with which they were able to govern. 

And so there are some structural things that are particular to 

Brazil that will make it difficult for them to root out this problem 

and I think that is what the article you are referencing was—— 

Mr. YOHO. It is. I mean we can look at JBS. I got pulled into this 

to the largest meat producers in the world. They got slapped with 

a $3.2 billion fine for paying hundreds of millions of dollars out in 

bribes. 

In your statement you said the World Bank calls corruption public enemy No. 1 for the developing world. The United Nations observes that corruption represents an enormous obstacle to the realization of human rights and that unchecked it can undermine the 

functioning and legitimacy of institutions, the rule of law, and ultimately the State itself. And I see it as a cancer that just erodes 

society, it robs people of the wealth of a country that should be propelling society. 

So, my question for the panel is, No. 1, can you point out any 

examples where U.S. support has led to progress in addressing 

anti-corruption in the region? And we will focus on Latin America. 

Ms. Salazar? 

Ms. SALAZAR. OK. OK, two things. I want to start saying two 

things. First of all, when I, when we, or at least when I talk about 

corrupt institutions in Latin America, I mean in general it is true, 

but in particular we need to see each country and each particular-
35 

ities. I mean, I do believe that there are countries where in spite 

the whole institution could be, you know, people not corrupted but 

attacked by corruption. There are like good people—— 

Mr. YOHO. Sure. 

Ms. SALAZAR [continuing]. —champions, I mean good people 

working to fight against corruption, so I think we need to support 

or you need to support these groups. And this is something that we 

have seen, for example—— 

Mr. YOHO. Let me ask you this, how do you support those? Are 

you familiar with MCC, the Millennium Challenge Corporation? 

Ms. SALAZAR. Yes. Yes. 

Mr. YOHO. You know, they go in and they have a set of metrics 

that they measure a country. 

Ms. SALAZAR. Yes. 

Mr. YOHO. I propose that we do trade that way. We trade with 

countries, we set up a metric. Countries at the very top that fall 

in alignment with America, not us dictating to them, but if they 

fall up here, they get the best trade deals. Countries that are below 

get a little bit less trade deal. They can always aspire to get to the 

other level, and that is the only way I can see that we can do that. 

But in doing that we have to make sure we are following the 

rules the way we are supposed to. I would love to go on, but I am 

out of time. Thank you for being here. 

Mr. SIRES. Congressman Vargas. 

Mr. VARGAS. Thank you very much, Mr. Chairman, and thank 

you for holding this hearing. And also, the ranking member, thank 

you. Especially, thanks to the people that are here with us today 

especially the presenters. 

Mr. Camilleri, you said that it is hard to get people that are part 

of the system to reform that system. As you know, Andres Manuel 

Lopez Obredor, AMLO, in Mexico, was recently elected President. 

He ran on an anti-corruption platform. That was going to be and 

is what he is attempting to do. 

And a number of us were able to go down to his inauguration 

and he basically said, you know, if we can stop corruption in this 

country, we can do all sorts of things for the country and quite aggressively propose the future for Mexico. What do you think of 

Mexico and what is going on there with the programs that he has 

instituted or he is attempting to institute and how do you think 

that is going to work out? Because he was not part, I would say 

he was not part of the people he was trying to get in, obviously, 

but he was not part of that system. 

Mr. CAMILLERI. Thank you, Congressman. 

I think you are right about that. AMLO is somebody who is 

viewed by the Mexican people as having a level of personal rectitude that is pretty unique in that political system. That gives him 

a real platform to take on this issue and I think it is right to say 

that the backlash against corruption was one of the things that 

most drove his successful election campaign. 

I think what has been perhaps concerning is that it is not clear 

what the institutional kind of approach to combating corruption 

will be from his government. That is, having this momentum, having this platform, having the personal legitimacy that he brings to 

the issue, what is he going to do with that? 
36 

This is not going to be a case where the fact that the president 

is not a crook is enough to make, you know, every last cop in Mexico honest, right. You are going to have to do some things at a 

structural level starting with, for example, and DPLF has done a 

lot of work on this, bringing greater independence to the public 

prosecutor’s office. And those sorts of things—— 

Mr. VARGAS. He has proposed a number of these measures. I 

think that you probably have seen them in his inauguration. I do 

not know if he is going to follow through, but he certainly did propose them. 

Mr. CAMILLERI. Yes, I think we are waiting to see. I mean I have 

met with his minister who is sort of running this file. I think their 

diagnosis of the situation is accurate. I think they are well meaning, but they have been a little bit slow out of the gate, to be honest, in terms of actually putting in place a program to weed out corruption in the country. It is early, but we will have to wait and see. 

Mr. VARGAS. Before my time runs out, I have to do ask this and 

I would be remiss if I did not. I am a former Jesuit. I was in the 

Jesuits for about 5 years. And Nicaragua, right now, has an incredible problem with the President there and some of the corruption, 

and in particular I fear for the life of Chepe Idiaquez. He is director of the Jesuit university there, UCA, because he is standing up 

to the corruption. 

Can anyone comment about what is going on in Nicaragua, and 

again in particular this priest who I think has been very brave to 

stand up to the corruption that he sees. 

Mr. Hall, would you like to handle that one if you can, and then 

we will go to Ms. Salazar. If you have information, go ahead. 

Mr. HALL. I do not think I am the right person to answer that. 

Mr. VARGAS. OK, Ms. Salazar? 

Ms. SALAZAR. Yes. Well, the situation in Nicaragua is very complicated and somehow, you know, from my opinion, from my point 

of view, what we have seen last year in Nicaragua, I mean cities 

movilizations and the people killed, detained, political detentions, 

and so on and so forth, are the result of a process of 20 years of 

co-option of the government institutions. 

From my perspective, from the work I do, I feel somehow guilty 

for not being able to say something before, because now all institutions are corrupted by the political power and it is going to take 

time to find, I mean to enter into a transition process. I think this 

is what this country needs, a transition process to go through accountability and institutional reforms. 

Mr. VARGAS. Well, thank you. And again, I want to mention 

again the priest’s name is Father Chepe Idiaquez. He has been 

threatened many times. The university has been harassed, has 

been attacked. I want to make sure that we keep him and the university in our mind when we speak about this issue. I hope he was 

not one of the people that has been killed, because a number of 

people have been killed. So again, I would mention his name, 

Chepe Idiaquez, the Society of Jesus, the rector of the UCA. Thank 

you. 

Mr. SIRES. Thank you, Congressman. 

Congressman Levin. 

Mr. LEVIN. Thank you very much, Mr. Chairman. 
37 

Mr. Camilleri, when it comes to the U.S. role in fighting corruption both our actions and our words matter, yet, at times, the 

Trump administration has been inconsistent in speaking out about 

corruption in the Americas. The administration has been relatively 

quiet about the efforts by Guatemalan President Jimmy Morales to 

undermine the U.S. supported, U.N. supported International Commission against Impunity in Guatemala, or CICIG, particularly 

while it investigates corruption within Mr. Morales’ own administration. 

Last month, Foreign Policy reported, quote, that over the past 2 

years, the Trump administration’s political appointees have worked 

to undermine a highly regarded U.N. anti-corruption commission in 

Guatemala, one that has uncovered alleged illegal campaign contributions to Morales as well as allegations of corruption by his 

brother and son. 

Foreign Policy also reported that following a March 2018 trip to 

Guatemala, then U.S. Ambassador to the United Nations, Nikki 

Haley, began pushing for the U.S. to end its financial support for 

CICIG. Yet months earlier, Haley argued in an op-ed, quote, corruption spurs revolutions, enables extremist groups, and fuels civil 

wars. Combating corruption is not just about good governance, it 

is about maintaining peace and security. What do you think accounts for this inconsistency from the Trump administration? 

Mr. CAMILLERI. Congressman, I honestly do not know, but I am 

glad you raised it. CICIG, in my view, has been the most successful 

innovation in anti-corruption policy and law, certainly in the 15 

years that I have been working on legal and policy issues in the 

hemisphere. It has also been—— 

Mr. LEVIN. Most important in the hemisphere or most important 

in Guatemala? 

Mr. CAMILLERI. In the hemisphere, certainly in Guatemala. 

Mr. LEVIN. And why, expand on that. What is so great about 

CICIG? 

Mr. CAMILLERI. CICIG took an extremely fragile judicial system 

with almost absolute impunity for the powerful with high degrees 

of penetration and cooption, intimidation by organized crime, and 

turned it into a place where not only was that impunity broken, 

Guatemalan democracy quite literally was saved on a couple of occasions by CICIG. Presidents, vice presidents, ministers started 

going to jail. And I think, most importantly, the courageous Guatemalans who were always there, the Attorney Generals Claudia Paz, 

Thelma Aldana, were able to do their work. 

I think what we discovered when you put CICIG in the country 

and you gave them sort of this blanket of protection was that Guatemalans are capable, they are courageous, they just need to be in 

an environment where everything they are doing is not being 

leaked to organized crime and their families aren’t being intimidated and they are being forced into exile. 

And so CICIG was a gamechanger. It was also something that 

had strong bipartisan support. It was created during the George W. 

Bush Administration. 

Mr. LEVIN. Right. 

Mr. CAMILLERI. Supported through the Obama Administration, 

supported at the beginning of the Trump administration. Secretary 
38 

Tillerson gave a speech in Austin in which he praised CICIG. So, 

it came as a, I would say not just a surprise, but sort of a devastating blow to those of us who work on this issue to see the 

Trump administration in some respects turn its back on CICIG. 

Mr. LEVIN. And do you think President Morales has felt 

emboldened by the Trump administration’s tepid response to his 

actions? 

Mr. CAMILLERI. There is no question in my mind. I will say the 

Trump administration’s broader policy in Guatemala in the last 

couple of months has seemed to find its footing again, so the administration’s stance on the revival of an amnesty law for war-related crimes has been good and some of its statements on electionrelated issues have also been good. 

The decision to, on the jeeps that were misused to intimidate 

CICIG and other Guatemalan organizations and institutions, again 

I think the administration is coming to a better place on some of 

those broader rule of law issues in Guatemala, but certainly on 

CICIG it was not just disappointing, but emboldening as you said 

for Jimmy Morales in his campaign to save his own skin by going 

after CICIG. 

Mr. LEVIN. All right. 

Well, I have just a little time left. Ms. Salazar, let me bring you 

in to this. Given this idea about the Guatemalans own capacity 

being freed here, what is your idea about how different countries 

have prosecuted or not prosecuted corruption cases? Is it differences in legal framework? Does the U.S. have a big role to play 

or the U.N. in helping empower countries? 

Ms. SALAZAR. As I was saying before, I think that—I mean in 

general judicial institutions in Latin America are weak, but in particular if you analyze country by country there are good people 

working in good institutions. I mean it is possible to identify particular areas, divisions worth it to support. Maybe it sounds 

strange, but, for example, this is what happened in Peru. There is 

a huge corruption scandal, not necessarily the Odebrecht case but 

a similar one, and because of this case the general prosecutor had 

to resign. But there is still a group within the general prosecutor’s 

office investigating the Odebrecht case and investigating it really 

good. I mean, really, they are doing a great job. So this is my first 

idea. 

And the second idea is in terms of prosecution for the Odebrecht 

case there are differences in countries. I would say that countries 

that have done more have been Brazil and Peru and the countries 

that have done less are of course Venezuela and Mexico, unfortunately Mexico. Yes, they have done almost anything. 

Mr. LEVIN. Thank you. 

Sorry to go over, Mr. Chairman. I yield back. 

Mr. SIRES. Congressman Gonzalez. 

Mr. GONZALEZ. Thank you, Mr. Chairman, and thank you to the 

panel for being here with us today. I am going to continue asking 

a couple of questions that Congressman Espaillat and Congressman Levin talked about, which in particular is with, in Guatemala. 

And I am very interested in Guatemala because I think the idea 

of CICIG is a great idea, but there are some issues that concern 

me. But I think it is a great idea that we have a group that is in-
39 

ternal in a country and is on the ground fighting corruption on a 

daily basis. 

My concern is, what Department of Justice supervision do we 

have on CICIG, if at all? That could be to anyone on the panel who 

wants to take that question. Mr. Hall might know about that. 

Mr. HALL. I do not know authoritatively. My understanding is 

that it is not a Department of Justice program so it is not supported directly in the way that other more bilateral programs 

might be. 

Mr. GONZALEZ. That is my understanding as well. So how do we 

measure the accountability of CICIG? Does anybody know how 

much has been spent on that group in the last 10 years? 

Mr. CAMILLERI. Congressman, that information is public but I do 

not have it in front of me. 

Mr. GONZALEZ. Yes. Well, it is about $168 million. That is a lot 

of money. And I see what the Department of Justice could do with 

a $168 million just in a small, you know, in the southern district 

of Texas where I practice law, and they would have a lot of arrests 

and convictions. And I know they did a great job at the beginning 

with Otto Perez and that organization that was severely corrupt 

and I am sure we are far from where we need to be. 

But my only concern is that I feel the Department of Justice 

should be more involved in overseeing what is happening in Guatemala and in particular with CICIG. At the end of the day I know, 

and by no means am I giving President Morales or the Government 

of Guatemala a pass on anything, but it is concerning that we have 

an international organization in that group with complete immunity, if I am correct. If I am not correct, please correct me, right— 

with complete immunity, with high investment both American and 

international, and it seems like we do not have milestones that we 

could measure that that investment is a good investment. 

And I just could tell you, you know, just looking at what we do 

in the Department of Justice in one area with $168 million, it 

seems that we would have a massive result from that. And I do not 

see—I did see some great results at the beginning, but it seemed 

to have kind of taken a huge dip. And I know that at the end of 

the day the President was, the President’s brother and son had 

some issues. Can you tell me anything about that? 

Ms. SALAZAR. I agree with you, Congressman Gonzalez, about the 

accountability thing. I really do think, I think all institutions need 

to be accountable for the work they do and the money they receive, 

either State money or private money. This is clear. I do not know 

the details about the accountability mechanisms of CICIG where, 

but I agree totally with you that they need to be accountable for 

the way they have spent their money. But on the other side, I have 

to address the great work that the CICIG has done. 

Mr. GONZALEZ. Do you know—excuse me for interrupting. Do you 

know why, what are the issues that concern the President’s brother 

and son that they got caught up in a corruption scandal in Guatemala? Does anybody here know the details of that? 

Ms. SALAZAR. Well, they were of course they did not like what 

CICIG was doing because in one of the—— 

Mr. GONZALEZ. But do you know what they are being accused of? 

Ms. SALAZAR. I do not remember. Illegal finance? 
40 

Mr. GONZALEZ. OK, that is political. That is the President. 

Ms. SALAZAR. Yes. 

Mr. GONZALEZ. I am talking about the son and the brother. 

Ms. SALAZAR. I do not remember. I do not remember. 

Mr. GONZALEZ. OK. I have done a little bit of research on this 

and it had to do with $10,000 worth of gift baskets. 

Ms. SALAZAR. Oh, OK. Yes. 

Mr. GONZALEZ. Which is quite shocking. And I have no problem, 

you know, anybody who commits a crime should pay for it and deal 

with it, but I have huge issue. I know we barged into that Presidential palace with cameras and machine guns to arrest a kid who 

had been going to school here in the United States that came down 

to face the consequences, and I just think that CICIG when they 

did that, really, I think it hurt their credibility. 

And I am not talking about Guatemala, because what other 

country—I thought that was a great model to take to other countries in Central America and Mexico and South America. But how 

are we ever going to get them to accept that program when they 

see that type of abuse in places like Guatemala? 

Ms. SALAZAR. I accept that, you know, if this is the case, I will 

agree with you that maybe it was a mistake in the strategy to select the case. But I would not think that this decision, this maybe 

bad decision would, you know, nullify or would, you know, disappear all that important things that the CICIG has done. 

Mr. GONZALEZ. I agree with that. 

Ms. SALAZAR. Yes. 

Mr. GONZALEZ. I agree with that. At the beginning I think they 

did a great job, but I do feel that something went off track at some 

point. And, you know, I think that maybe the U.N. should have 

gotten involved at that point and maybe changed the leadership or 

something to save the integrity of CICIG and to allow an organization like that to be acceptable to other essential American countries 

or Latin American countries. And I am particularly bothered that 

the Department of Justice plays a very little role in that group. 

Ms. SALAZAR. If you allow me to say, if that happen I would 

agree with you that you need to do more oversight about CICIG’s 

activity. 

Mr. GONZALEZ. So who would do that? 

Ms. SALAZAR. I would agree with that. But again, on the other 

hand, we need to preserve the institution. We need to preserve the 

initiative because, you know, if you see in other countries in the 

region, they are asking for a CICIG, because in many countries 

State institutions are corrupted by the political power and the 

criminal organizations. 

Mr. GONZALEZ. I agree. But who would supervise CICIG? 

OK, I yield back. You can answer that later. 

Mr. SIRES. I gave you a minute and a half. 

Congressman Phillips. 

Mr. PHILLIPS. Thank you, Mr. Chairman and to our panel. 

I would like to move to a little bit more macro level and discuss 

for a moment how we measure corruption, how we best measure 

corruption and how we provide incentives to combat corruption. So, 

turning to the former, I would welcome each of your thoughts on 

using the Corruption Perceptions Index as a real measure of cor-
41 

ruption and if there are some alternatives that we should be considering. 

Mr. CAMILLERI. Congressman, thank you. So, corruption is notoriously hard to measure which is probably why you are asking the 

question. Asking experts is the CPI, the Corruption Perception 

Index does is one method, another is to ask citizens themselves 

their experience, so, you know, have you paid a bribe in the last 

6 months, in the last year. Those capture slightly different things. 

One is more about petty corruption, the other is about grand corruption. 

I think the CPI is probably the best thing we have. I do not think 

it means that we can take a country that is 67th on the list and 

say it is doing better than a country that is 68th on the list. You 

know, it is more, you know, it helps us kind of spot general trends 

and place countries comparatively in broader terms. But certainly, 

you know, we do have a challenge in terms of accurately measuring 

corruption. 

Mr. PHILLIPS. OK. Thank you. 

Ms. Salazar. 

Ms. SALAZAR. Yes, briefly. Yes, I agree with Michael, it is very 

difficult to measure corruption. For me as a lawyer, I am not a political scientist, but as a lawyer I think that, you know, if you find 

high level corruption cases with no prosecution or with high levels 

of impunity, well, for me in this country the problem of corruption 

is very high. 

But I want to—two things. One is that, I mean why Odebrecht 

happened and these kinds of cases happened, the Odebrecht case 

I think it found a very particular context in the region because we 

went through during the last 20 years, 15 years in Latin America, 

we went through a crisis of political parties. Our traditional political parties lost trust from the public and this is why appear many 

new political parties, the small ones who need money. They needed 

money to do their campaigns and this is where Odebrecht appeared, so two needs found each other and I think it was a great 

context for Odebrecht to have a success. 

And the second thing is that for me, the main sign that the anticorruption movement or anti-corruption measures are having success is seeing that high level authorities are prosecuted and are imprisoned. This is the best example that you can have in any Latin 

American countries as a deterrent for corruption. 

Mr. PHILLIPS. Thank you. 

Mr. Hall. 

Mr. HALL. I have already made it clear that I am an advocate 

for deterrence so that is why I agree with Ms. Salazar’s comment. 

I also think that perception does matter. I mean, I analogize it to 

the organized crime in Philadelphia where I am from and the effect 

of organized, the pernicious effect of organized crime often was 

overlooked in press coverage of the mob. 

What would get covered would be things exploding and people 

getting shot, you know, and exciting events like that. But where it 

really was felt was on the street, you know, if there was somebody, 

you know, causing a problem in the neighborhood, the neighbors 

would have to ask themselves, do I call the police or do I call the 

capo, you know, and when, you know, the mob infiltrates unions 
42 

that affects people’s jobs and it affects, you know, who gets hired 

for what. 

And then of course when American politicians are corrupted by 

the mob the same thing happens, and people, it is this exact phenomenon we are describing. People just lose confidence in the process and they do not believe that they are going to be treated fairly 

and so they have to make these decisions. It becomes a shadow 

government, in effect. 

So the idea of asking people, you know, questions about how does 

this affect you on a concrete level, I agree, makes a lot of sense. 

Mr. PHILLIPS. Thank you. And we have less than a minute left, 

but I would welcome any comments on incentivizing good governance and in the Millennium Challenge Corporation, whether or not 

any of you think those are worthy mechanisms to provide incentives to encourage good government. We have about 30 seconds. 

Mr. CAMILLERI. Sure. Well, you know, thumbs up for MCC. Certainly, anything that creates a direct link between stronger rule of 

law, stronger programs to combat corruption, and stronger support 

from the United States, I think, is a good idea. 

Mr. PHILLIPS. And effective? 

Mr. CAMILLERI. Yes. 

Mr. PHILLIPS. I like succinct answers. 

All right, we are out of time. I yield back. Thank you. 

Mr. SIRES. Thank you. 

Congressman Castro. 

Mr. CASTRO. Thank you. 

I want to ask you all—and I apologize. I have been running 

around this morning so I just got in. But this corruption, how much 

of it is driven by poverty and socioeconomic circumstances versus 

by greed, for example, or graft or things like that? 

Ms. SALAZAR. Well, in the case of petty corruption I think, you 

know, poverty and lack of opportunities are an important factor. 

But when we talk about grand corruption, big criminal organizations, you know, working as a network to take advantage of public 

wealth for their own gain, I do not think it is connected to poverty, 

it is connected with greed, and taking advantage of State wealth. 

Mr. CASTRO. And also you all may have gone through this already, but what is—we have talked a lot, for example, about doing 

something in the Northern Triangle countries of Central America. 

A big part of that would be an anti-corruption assistance, right? 

What is the scale of the challenge as far as you all can tell? For 

example, are we talking about $5 billion, are you talking about $20 

billion, $30 billion? What is the scale of the challenge? 

Mr. CAMILLERI. Congressman, obviously it is hard to put a number on it. 

Mr. CASTRO. Sure. 

Mr. CAMILLERI. The Central America package that was focused 

on the Northern Triangle that I was involved in piecing together 

was the one that the Obama Administration designed. It was a billion dollar per year package. I think Congress funded about threequarters of that which is still a significant investment in the region. And so I think something on that kind of magnitude is probably about right. 
43 

There is obviously an issue of absorption capacity as well as the 

vast sort of needs on the ground. But I think just as important as 

kind of a scale is this issue of incentives that Congressman Phillips 

raised, which is, you know, how can we more nimble with that 

money? How can we put it in places where it is being used by responsible stewards? 

We have seen, just taking the Northern Triangle countries for example, we have seen extraordinary attorney generals and we have 

seen corrupt attorney generals. Shouldn’t our assistance be responding to the particular people in charge of the institutions on 

the ground that we are supporting in order to both get more bang 

for the U.S. taxpayers’ buck but also incentivize proper behavior by 

our partners in the region? 

Mr. CASTRO. Anybody else? 

Ms. SALAZAR. Yes, just briefly. Again, for me, the best deterrent 

for corruption is putting high level authorities in prison. Really, I 

mean this is what I have seen in the region. This is the best example for others and the best deterrent. 

Mr. CASTRO. All right, I yield back, Chairman. 

Mr. SIRES. Well, I want to take this time to thank the witnesses 

Mr. Hall, Ms. Salazar, Mr. Camilleri, and all the members that 

were here today. And with that, the committee is now adjourned. 

Good job. 

[Whereupon, at 11:17 a.m., the subcommittee was adjourned.] 
44 

APPENDIX 

SUBCOMMITTEE HEARING NOTICE 

COMMITTEE ON FOREIGN AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

WASHINGTON, DC 20515-6128 

Subcommittee ou the Western Hemisphere, Civilian Security, and Trade 

Albio Sires (D-NJ), Chairman 

March 26, 20 I 9 

TO: MEMBERS OF THE COMMITTEE ON FOREIGN AFFAIRS 

You are respectfully requested to attend an OPEN hearing of the Committee on Foreign 

Affairs, to be held by the Subcommittee on the Western Hemisphere, Civilian Security, and Trade 

in Room 2172 of the Rayburn House Office Building (and available Jive on the Committee website 

at https://foreignaffairs.house.gov/): 

DATE: 

TIME: 

SUBJECT: 

WITNESS: 

Tuesday, March 26,2019 

10:00 am 

Understanding Odebrecht: Lessons for Combating Corruption in the 

Americas 

Mr. Michael Camilleri 

Director 

Peter D. Bell Rule of Law Program 

Inter-American Dialogue 

Ms. Katya Salazar 

Executive Director 

Due Process of Law Foundation 

Mr. David L. Hall 

Partner 

Wiggin and Dana LLP 

By Direction of the Chairman 

The Committee on Foreign Affairs seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations. 

please call 2021225-5021 at least four business days in advance of the event, whenever practicable. Questions with regard to special 

accommodations in general (including availability of Committee materials in alternative formats and assistive listening devices) may be directed 

to the Committee. 
45 

COMMITTEE ON FOREIGN AFFAIRS 

MINUTES OF SUBCOMMITTEE ON WESTERN HEMISPHERE, CIVIUAN SECURITY, AND TRADE HEARING 

Day Tuesday Date March 26, 2019 Room, __ --"2'-'1-'-72 __ _ 

Slat·tingTime 10:02am EmllngTime 11:17am 

Recesses !__Qj { __ to~)( __ to ~)( __ to~) (__to_) (__to~) (__to_) 

Presiding Member(s) 

Chairman Alblo Sires 

Check all of the follooviug tlmt apply: 

Ojlell Session 0 Executil'e f£!!>sed) Sessiou 0 Televised l.:LI 

TITLE OF HEARING: 

Electronically Record~ taped) 0 

Stenographic Recm·d l.:LI 

Understanding Odebrecht: lessons on Combating Corruption In the Americas 

SUBCOMMITTEE MEMBERS PRESENT: 

See attendance sheet 

NON-SUBCOMMITTEE MEMBERS PRESENT: (Mark wilh an *If they are not members of full committee.) 

Nona 

HEARING WITNESSES: Same as meeting notice attached? Yes EJ No 0 

(If "no", please list below and include title, agency, department, or organization.) 

STATEMENTS FOR THE RECORD: (List <my statements submilledfor the recol'd.) QFRSires 

QFR Rooney 

TIME SCHEDULED TO RECONVENE---- ot· 

TIME ADJOURNED 11:17 am 
46 

PRESENT 

X 

X 

X 

X 

X 

X 

X 

HOUSE COMMITTEE ON FOREIGN AFFAIRS 

WHEM SUBCOMMITTEE HEARING 

MEMBER PRESENT MEMBER 

Albio Sires, NJ X Francis Rooney, FL 

Gregory W. Meeks, NY Christopher Smith, NJ 

Joaquin Castro, TX X Ted Yoho, FL 

Adriano Espaillat, NY John Curtis, UT 

Dean Phillips, MN Ken Buck, CO 

Andy Levin, Ml Michael Guest, MS 

Vicente GonzAlez" TX 

Juan Vargas, CA 
47 

RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD 

Questions for the Record Submitted by Rep. Albio Sires 

HFAC WHEM Hearing: Odebrecht 

March 26, 2019 

Michael Camilleri: 

1. Can you explain the role of CICIO in investigating Odebrecht in Guatemala, including 

the effectiveness of those investigations and the challenges CICIO has faced in 

conducting its work? 

It its plea agreement with the U.S. Department of Justice, Odebrecht admitted to making 

approximately $18 million in corrupt payments to corrupt officials in Guatemala. Based on this 

revelation, CICIO worked closely with Guatemala's public prosecutor's office (Ministerio 

Publico) to investigate the illicit payments. Their investigation demonstrated that Odebrecht 

directed $4.9 million in bribes to then-Communications Minister Alejandro Sinibali and $1.36 

million in payments to a then-leading presidential candidate, Manuel Baldiz6n. The bribes to 

Sinibaldi represented a percentage of the value of public construction contracts awarded to 

Odebrecht, with corrupt payments channeled by the company's Division of Structured 

Operations to the offshore accounts of Sinibaldi associates via a bank in Antigua and Barbuda. 

The Odebrecht investigation in Guatemala is a prime example of the sophisticated, independent 

prosecutorial work and resulting accountability for grand corruption made possible by CICIO's 

partnership with the Ministerio Publico. To build its case, the two entities obtained relevant 

evidence from Brazilian prosecutors, developed their own lines of investigation, tracked complex 

financial movements, and employed plea bargain agreements to build their case-including a 

cooperation agreement with Odebrecht itself that included $17.9 million in reparations to the 

Guatemalan state. On January 20,2018, eleven raids were executed with two suspects captured. 

Just ten months later, in October 2018, the first conviction was achieved in the case. Sinibaldi 

remains at large, while Baldiz6n was detained by U.S. officials in early 2018 pending his return 

to Guatemala to face charges. 

Unfortunately, CICIO's effectiveness has been curtailed significantly by Guatemalan President 

Jimmy Morales, who has announced he will not renew CICIO's mandate when it expires in 

September and has refused to allow CICIO chieflviin Velasquez to return to Guatemala. 

Morales' government has also taken steps to undermine the Ministerio Publico's anticorruption 

prosecutors, who work closely with CICIO to investigate high-impact cases. 

2. According to the Department of Justice, in some cases Odebrecht used the U.S. banking 

system to pass funds internationally through shell companies. These funds were then used 

to bribe officials in countries throughout the region. What steps can the U.S. government 

take to crack down on the movement of anonymous funds within our banking system? 

Which of these steps would require Congressional action and which could be achieved 

under existing law? 
48 

As documented by the Department of Justice, in multiple cases shell companies and offshore 

accounts were used by Odebrecht to channel funds from U.S. bank accounts to corrupt foreign 

officials. For example, Odebrecht's Division of Structured Operations set up a shell company 

called Go lac in the British Virgin Islands. Funds were transferred by Odebrecht from New 

Yorkbased accounts to an offshore account opened by Golac, with these funds then used to make 

bribe payments. 

The use of anonymous shell companies in the Odebrecht case, including to facilitate and disguise 

the movement of funds through the U.S. banking system, underscores the need for beneficial 

ownership transparency. Beneficial ownership registries would impede money laundering and 

the flow of illicit financial flows by informing the public and enforcement agencies of the actual 

beneficiaries of transactions carried out by legal entities. 

Anonymous companies were used in 70 percent of grand corruption cases reviewed by the World 

Bank, yet Transparency International notes that the United States has no federal law generally 

requiring legal entities to maintain beneficial ownership information. Ongoing bipartisan efforts 

to close this loophole should be prioritized. Doing so will not only make it more difficult for 

dirty money to be laundered through the U.S. financial system, but also put our negotiators in a 

stronger position to press other countries to do the same. 
49 

Katya Salazar: 

1. In looking at the many countries affected by Odebrecht, there are clearly differences in 

terms of the effectiveness of their legal systems and capacity to prosecute grand 

corruption cases. Are there specific legal tools that are particularly valuable for 

investigating a massive corruption scheme like that carried out by Odebrecht and which 

the U.S. and other international partners should press governments in the region to adopt? 

One of the most important tools to investigate a massive and sophisticated corruption scheme is 

the ability of prosecutors to offer sentence reductions in exchange for information relevant to the 

investigation. Similar to the "plea agreement" in the United States, the so-called "colaboraci6n 

eficaz" or "delaci6n premiada" in Latin America have been key to obtaining critical evidence for 

Odebrecht-related cases in Brazil and Peru. These tools need to be used more frequently for further 

progress to made in corruption prosecutions. They also must be better regulated in order to avoid 

potential violations of due process or other fundamental rights that could later challenge or impugn 

the process. 
50 

David Hall: 

I. According to the Department of Justice, in some cases Odebrecht used the U.S. banking 

system to pass funds internationally through shell companies. These funds were then used 

to bribe officials in countries throughout the region. What steps can the U.S. government 

take to crack down on the movement of anonymous funds within our banking system? 

Which of these steps would require Congressional action and which could be achieved 

under existing law? 

Response 

Odebrecht's Division of Structured Operations exerted significant effort to obscure and conceal 

the source and destination of the bribes it paid. As set forth in the charging information: "Many 

of the transactions were layered through multiple levels of offshore entities and bank accounts 

throughout the world, often transferring the illicit funds through up to four levels of offshore 

bank accounts before reaching the final recipient. In this regard, members of the conspiracy 

sought to distance the origin of the funds from the final beneficiaries." Odebrecht Information at 

,; 28. The recipients of these bribes concealed their identities by using their own offshore 

anonymous accounts. Jd. ,[31. As a result, it is unlikely a U.S. bank could have, without 

specific cueing information, unwound these transfers and tied them to the payment of bribes to 

foreign officials.' 

The effectiveness of anti-money laundering regulations and policies depends on the availability 

of information about the source, destination, and nature offinaneial transactions. In this case, 

the information necessary to identify these transactions as bribes was located outside of the U.S. 

and was discovered by foreign law enforcement agencies. Indeed, it was through cooperation 

with foreign law enforcement that U.S. authorities were able to identify the string of transactions 

culminating in the payment of bribes to foreign officials. One way the U.S. government can 

discourage the use of the U.S. banking system to pay bribes to foreign officials is by 

strengthening collaborative relationships between U.S. and foreign law enforcement and 

regulatory authorities by, for example, expanding law enforcement attache programs. The U.S. 

government can thereby increase the information available to U.S. law enforcement, regulators, 

and banking institutions alike, enabling both more effectively enforcement and also more 

effective anti-money laundering programs. 

1 l was not involved in the investigation into these transactions, and it is possible that the agencies that conducted 

this investigation possess additional information about the nature of these transactions. However, it does not appear, 

from the information publicly available, that the U.S. banking institutions involved in these transactions were aware 

that they were part of an illegal scheme to pay bribes to foreign officials. 
51 

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Questions for the Record Submitted to Ms. Katya Salazar 

Rep. Francis Rooney 

HFAC WHEM Hearing: Odebrecht 

March 26,2019 

1. What is the most effective way to encourage governments in Latin America to prosecute 

individuals who participated in the Odebrecht corruption scandal? 

Strengthening the independence and efficiency of the Attorney Generals' offices in Latin 

America is key to facilitating Odebrecht-related prosecutions. In addition to technical assistance, 

the US government can support the integrity of prosecutors' offices by supporting merit-based, 

less politicized selection processes for Attorneys General. It should also urge foreign 

governments that those involved in investigating or prosecuting corruption cases receive needed 

protection. The US government can do so through in part through diplomatic efforts, i.e., making 

this issue a priority for US Ambassadors, the presence of US diplomats at public hearings and 

trial proceedings, etc. 

2. How can the U.S. government help to encourage transparency in countries where 

Odebrecht did not disclose the full extent of its corrupt practices to protect its business 

and political associates? 

A review of corporate accountability laws and potential reforms is warranted in those countries. 

Additionally, supporting investigative journalism is key for encouraging transparency. The US 

government should support investigative journalism outlets through technical assistance and 

exchanges with US journalists. This goes hand in hand with full diplomatic support for freedom 

of expression and freedom of access to information. 

3. In your opinion, what should happen to those individuals who participated in Odebrecht's 

corruption acts in countries Odebrecht did not disclose their participation, in violation of 

its plea agreement with the United States Department of Justice? 

Those individuals should be investigated and prosecuted in the relevant Latin American 

countries (or in the US if there is sufficient nexus). Offering a plea agreement (in Latin America, 

through "colaboracion eficaz" or similar laws) is crucial to enable prosecutors to gather 

sufficient information to begin to untangle the web of Odebrecht-related corruption. The 

prosecution of ringleaders and high-level officials should be prioritized over those who engaged 

in smaller-scale acts of corruption.