The Justice Department and the Securities and Exchange Commission jointly announced Monday that Brazilian aircraft maker Embraer will pay more than $205 million to settle charges under the Foreign Corrupt Practices Act.
U.S. authorities charged that Embraer, which makes smaller passenger and military airplanes that compete with North American companies across the globe, had bribed officials in state-owned companies to win contracts in Saudi Arabia, Mozambique, India and the Dominican Republic.
The authorities say that bribes, masked through complex schemes, were paid through U.S. banks with the involvement of Embraer’s U.S. subsidiary, which is based in Fort Lauderdale, Fla.
The Justice Department announced penalties of $107 million, and the SEC announced it will claw back profits and interest payments from Embraer worth a combined $98 million.
“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,” Kara N. Brockmeyer, the head of the SEC enforcement division’s Foreign Corrupt Practices Act unit, said in a statement.
The SEC complaint in the U.S. District Court for the Southern District of Florida alleged that Embraer officials had paid: $3.52 million in bribes to an official in the Dominican Republic’s air force to secure a military aircraft contract; $1.65 million in bribes to win business from a Saudi Arabian state company; $800,000 to an official in Mozambique for a contract with the state-owned airline; and about $5.76 million to an agent in India for the purchase of three specialized military aircraft for that country’s air force.
Embraer mischaracterized the bribe payments as legitimate expenses in its books and records.
SEC’s charging documents filed in South Florida
Embraer makes the popular turboprop light military aircraft called the Tucano, which is used for everything from coastal patrol to combating drug traffickers. It competes with giants Boeing and Airbus with its Embraer 190 passenger jet, and its puddle jumper the Bandeirante is popular the world over.
The SEC is involved in the probe because Embraer lists shares on the New York Stock Exchange. The United States reportedly has investigated Embraer since 2010, and the leading Brazilian daily newspaper Folha de Sao Paulo had written in August about alleged bribes paid to win contracts in Saudi Arabia and India.
Under terms of the settlement announced Monday, Embraer committed to retaining an independent corporate monitor for at least three years.
The announcement is just the latest embarrassment from Brazil, an important emerging economy that has been almost paralyzed by corruption scandals that led to the impeachment of an elected president, whose successor is banned from seeking election because of campaign-finance irregularities.
Brazil also featured prominently in the Panama Papers, April’s global leak of offshore company formation documents that showed how Brazilian government and industry leaders moved large amounts of money through offshore shell companies, and used shell companies in Nevada to camouflage real estate purchases at home and abroad.
Kevin G. Hall: 202-383-6038, @KevinGHall
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