Risk & Compliance

Brazilian Aircraft Maker to Pay $205M Over Bribery Allegations

Aircraft manufacturer Embraer admitted responsibility for multiple FCPA violations in four foreign countries from 2007 to 2011.
Sean AlloccaOctober 25, 2016
Brazilian Aircraft Maker to Pay $205M Over Bribery Allegations

An international aircraft manufacturer settled a Securities and Exchange Commission complaint alleging the company bribed multiple officials in four foreign countries to help secure tens of millions of dollars in aircraft contracts.

Brazilian airplane manufacturer Embraer has agreed to pay $205 million to resolve violations of the Foreign Corrupt Practices Act, from 2007 to 2011, that netted the company more than $83 million in fraudulent profits.

Embraer allegedly paid millions of dollars in bribes and created false books to keep the illegal activity hidden. The company also allegedly cooked up an illegal accounting scheme in India.

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“As alleged in our complaint, Embraer realized significant revenues by surreptitiously using third parties to mask bribes paid to government officials with influence over contracts it was competing to win,” said the director of the SEC’s enforcement division, Andrew J. Ceresney.

The complaint alleges bribes were paid in four countries through third-party agents. According to the complaint, the company paid $3.52 million in bribes to an official in the Dominican Republic to secure a military contract there. An additional $1.65 million bribe was paid to an official in Saudi Arabia. The Mozambican government accepted an alleged $800,000 to arrange a contract with a state-owned airline. And an agent in India accepted $5.76 million in bribes in connection with the sale of three “highly specialized” military aircraft.

“Embraer’s alleged misconduct spanned multiple continents, and it has taken significant ongoing coordination among international regulators and law enforcement agencies to uncover the company’s complex bribery schemes,” said Kara N. Brockmeyer, chief of the SEC enforcement division’s FCPA unit.

In a press release, Embraer admitted responsibility for “misdeeds” in four transactions in connection with the sale of 16 aircraft.

The $107 million penalty to the Justice Department was part of a deferred prosecution settlement and is in addition to $98 million in disgorgement and interest that will be paid to the SEC.

The company could receive a $20 million credit depending on the amount it pays to Brazilian authorities in a parallel civil proceeding there. Under the agreement with the Justice Department, Embraer must retain an independent corporate compliance monitor for three years.

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