Embraer to pay $205 mn to settle bribery charges
25 October 2016
Brazilian aircraft maker Embraer SA yesterday agreed to pay $205 million to the US to settle an investigation into alleged bribes paid to officials in the Dominican Republic, Saudi Arabia, Mozambique and India over sales of aircrafts.
Under the settlement, Embraer, which admitted violating US anti-bribery laws, will pay $107 million to the US Justice Department (DoJ) and enter into a three-year deferred prosecution agreement, a penalty of $98 million to the US Securities and Exchange Commission (SEC).
The company will pay Brazilian authorities $20 million, an amount which will be deducted from the $98 million payable to the SEC.
The SEC's alleged that Embraer made more than $83 million in profits as a result of bribe payments from its US-based subsidiary through third-party agents to foreign government officials in the Dominican Republic, Saudi Arabia, and Mozambique.
Embraer allegedly created false books and records to conceal the illicit payments, and also engaged in an alleged accounting scheme in India.
Embraer paid $3.52 million as bribe to Dominican Republic air force officials over the sale of Super Tucano light attack aircraft, and routed $1.65 million to an official in Saudi Arabia to win a contract and paid another $800,000 to a Mozambican government official as a quid pro quo to win a contract of a government-owned airline.
It also paid around $5.76 million to an agent in India in connection with the sale of three highly specialised military aircraft for India's air force, and the payments were falsely recorded in Embraer's books and records as part of a consulting agreement that wasn't legitimate.
''As alleged in our complaint, Embraer realised significant revenues by surreptitiously using third parties to mask bribes paid to government officials with influence over contracts it was competing to win,'' said Andrew Ceresney, director of the SEC Enforcement Division.
Kara Brockmeyer, chief of the SEC Enforcement Division's FCPA Unit, added, ''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.''
''The company acknowledges responsibility for the conduct of its employees and agents according to the facts ascertained in the investigation,'' Sao Paulo-based Embraer said in a statement. ''Embraer deeply regrets this conduct. The company has learned from this experience and will be stronger as it moves forward.''