Peter Weinzierl to be Extradited to US
Fraud and Bribery in Odebrecht Matter
London’s High Court this week ruled that the former chief executive of an Austrian bank can be extradited to the United States on money laundering charges relating to Brazilian construction company Odebrecht. Peter Weinzierl – former chief executive of Meinl Bank – is accused of helping launder hundreds of millions of dollars in a scheme involving the use of slush funds to bribe public officials.
Will Weinzierl be held accountable in the United States?
First, a bit of background.
The gargantuan fraud and bribery scheme became synonymous with the construction giant, which changed its name to Novonor SA. After all, when your name becomes linked with corruption and scandal, business becomes a lot more difficult. However, 10 years ago, Odebrecht was intimately connected with what probably remains the biggest bribery and corruption scheme in history. And the scandal didn’t only involve Brazil.
Odebrecht executives have confessed to paying bribes in exchange for contracts not only in Brazil, but in various parts of the world. An international taskforce of investigators is looking into bribery in 10 countries, including Argentina, Colombia, Ecuador, Peru and Venezuela.
The corruption spanned three decades and involved bribes paid to high-level government officials, and even presidents! And it wasn’t just Latin America either. Officials in countries in Africa and Europe were also implicated in the corruption schemes.
In Argentina, the head of the Argentine AFI (Federal Intelligence Agency), Gustavo Arribas, in 2018 was accused of receiving bribes and other gifts from Odebrecht.
Arribas allegedly received $850,000 as part of a money-laundering scheme that involved front companies in several Brazilian cities. He owned several real estate properties in Brazil at the time.
Others in Argentina were also charged and prosecuted for bribery related to the construction of the AYSA water treatment plant in Tigre and the water treatment plant in Berazategui. The senior officials of AYSA were also prosecuted.
In Brazil, Odebrecht paid roughly $349 million in bribes to various political parties, foreign officials and their representatives in Brazil, and local government officials, financing political campaigns in elections to obtain benefits and contracts of construction projects in various districts of the country. Former president of the construction company, Marcelo Odebrecht, was sentenced to more than 19 years in prison for corruption in projects that involved the firm.
Venezuela apparently was paid the most bribe money from Odebrecht. According to the Justice Department, the Venezuelan government received at least $98 million in bribes.
Odebrecht in 2016 pleaded guilty to participating in the massive bribery scheme. The company also agreed to pay a $2.6 billion fine to Brazil, Switzerland, and the United States.
But things got even worse from there.
Brazil’s Supreme Court last year reversed many of the consequences imposed by those involved in the case, tossing out key evidence, setting aside major convictions and suspending billions of dollars in fines. The Court argued that biased investigators, prosecutors, and judges broke numerous laws when going after those responsible for the massive corruption.
The decisions are now cascading across Latin America, leading to the dismissals of at least 115 convictions in Brazil, according to anticorruption groups. The reversals are also casting doubt over many other cases in Panama, Ecuador, Peru and Argentina, including the convictions of several former presidents.
[…]
Leaked recordings and other evidence showed that a judge and prosecutors had coordinated against defendants, employed aggressive tactics to force confessions, and ordered illegal wiretaps.
These are high-level details about the scandal. If I were to delve into details, I’d probably write a book, and I have neither the time nor the attention span to do that.
Suffice it to say:
Huge corruption scandal
Billions paid in bribes
Several countries in Latin America, Africa, and Europe were ensnared
So what does Weinzierl have to do with it?
The US Justice Department in 2021 indicted Weinzierl and another Austrian banker, Alexander Waldstein, for their roles in a money-laundering scheme that involved millions of dollars through the US financial system on behalf of Odebrecht. According to the Justice Department, Weinzierl served as chief executive officer and Waldstein served as an officer of an Austrian bank—Anglo Austrian AAB Bank, which used to be known as Meinl Bank—and were on the board of a bank in Antigua, when they “conspired with Odebrecht and others to launder money in a scheme to defraud Brazil’s tax authority of more than $100 million in taxes and to create off-books slush funds used by Odebrecht to pay hundreds of millions of dollars in bribes for the benefit of public officials around the world.”
Specifically, Weinzierl, Waldstein, and their co-conspirators allegedly used fraudulent transactions and sham agreements to move more than $170 million from bank accounts in New York held in the name of Odebrecht, through the Austrian Bank, to offshore shell company bank accounts secretly owned and controlled by Odebrecht. As part of the scheme, Odebrecht used the slush funds funneled to the offshore shell company bank accounts to pay bribes. Odebrecht falsely recorded the hundreds of millions of dollars in international wire transfers sent to the Austrian Bank as legitimate business expenses and deducted the fraudulent payments from the overall profits that it reported in Brazil, thus reducing its tax liability and evading more than $100 million in taxes. Shell company bank accounts that were involved in the scheme, and used to pay bribes to foreign officials, were held at the Antiguan Bank, which was controlled by Weinzierl, Waldstein, and their co-conspirators and used to promote the scheme.
OCCRP reported that Odebrecht allegedly used the money it kept in Antiguan bank accounts to bribe foreign officials, while Weinzierl and Waldstein used the funds to buy US Treasury securities and corporate stocks and bonds.
Meinl wasn’t exactly clean either.
When I worked at the Treasury Department, the corruption of Meinl Bank wasn’t exactly a secret. Although Meinl was not the largest Austrian financial player in Russia (that dubious honor goes to Raiffeisen, which is still not subject to secondary sanctions, despite its well-documented transactions with Russia’s military-industrial sector), but it certainly had a significant footprint in Russia, according to the Center for Strategic and International Studies (CSIS).
An alleged fraud scandal in 2009 threatened Meinl Bank’s survival. Austrian authorities accused Julius Meinl V of having used complex ownership structures and offshore schemes to conduct investment fraud on a systematic scale. Charges were dropped due to inconclusive evidence. Although Meinl Bank encountered domestic difficulty, after 2009, the bank was able to expand its businesses in Russia successfully. Over the years, Meinl has been involved in several alleged fraud cases and allegations of breach-of-trust that included the use of offshore companies. One particular issue ties Meinl Bank to oligarchic and Russian interests.
Meinl was also allegedly implicated in the “Russian Laundromat” scandal, in which more than $20 billion in Russian government funds had been misappropriated and moved abroad. Between 2012 and 2014, at least 17 Austrian banks, including Meinl, were reportedly involved in the scheme. Meinl allegedly processed more than €300,000 in suspicious transactions, according to CSIS. While bank accounts at the bank were reportedly used for these transfers, the institution has not been accused of any wrongdoing.
But Meinl is slippery, and the institution itself was not prosecuted, even though its accounts were used to move the stolen funds.
In November 2019, the European Central Bank (ECB) revoked Meinl’s license, “due to its history and the violation of due diligence over the past few years,” according to OCCRP reporting.
Authorities in four countries at the time confirmed criminal investigations of operations facilitated by Meinl Bank between 2011 and 2015, when hundreds of millions of dollars and euros from other banks flowed through Meinl accounts before disappearing into shadowy offshore companies.
The investigation by OCCRP and its partners found evidence that Meinl helped bankers in Ukraine, Lithuania and Latvia bypass regulations and bans, shifting vast amounts of money out of their banks just before their collapse.
You should read the OCCRP report on Meinl. The schemes in which it was involved were significant and slimy.
But in 2019, just like that, Meinl Bank was gone. The bank requested a name change from Meinl to Anglo Austrian AAB Bank AG and vanished. In news releases, Anglo Austrian Bank announced “radical changes” in its business model, including cutting back on business in the post-Soviet states and complete withdrawal from its lending business.
The following year, Meinl filed for bankruptcy.
Is it any surprise that this bank’s former senior executive was allegedly involved in massive corruption scheme?
So will Weinzierl be held accountable?
Weinzierl was obviously not keen on being extradited to the United States to face the music. He denies the allegations against him and has been fighting his extradition for several years.
But the 28-page indictment details with a lot of specificity who was involved: the shell companies, foreign financial institutions, an insurance company in Mozambique, offshore companies in the British Virgin Islands and Panama—both high-risk jurisdictions for illicit finance—and foreign government officials. It describes the details of the criminal scheme and how it was perpetrated.
But will Weinzierl be prosecuted?
The Justice Department is significantly reducing its public corruption unit.
The Foreign Corrupt Practices Act is also not being enforced.
Neither is the Corporate Transparency Act.
With the Odebrecht case having essentially fallen apart in Brazil, impacting prosecutions in other countries, will the charges against Weinzierl stick?
And although Weinzierl’s case has to do with money laundering, it’s also clearly linked to corruption, bribery, and fraud, and I have to wonder if the prosecution will continue.