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Brazilian aircraft maker settles bribery charges

Brazilian aerospace company Embraer SA took in nearly $84 million in profits on aircraft sales after paying bribes

Embraer entered into the resolution to resolve criminal charges and agreed to pay a penalty of more than Dollars 107 million in connection with schemes involving the bribery of government officials in the Dominican Republic, Saudi Arabia and Mozambique, and to pay millions more in falsely recorded payments in India via a sham agency agreement, the US Justice Department said.

Federal prosecutors said in January 2005, Embraer executed an agency agreement with a shell company domiciled in the United Kingdom and affiliated with Agent D (although the name never appeared in the agreement).

In 2010, Embraer paid $1.6 million to an official at a Saudi Arabian state-owned and state-controlled company via a false agency agreement to secure that instrumentality's agreement to purchase three aircraft from Embraer for approximately $93 million. Embraer must retain an independent corporate monitor for at least three years.

In a statement, Embraer said its internal investigation involved the analysis of hundreds of thousands of documents and more than 100 interviews with employees and third parties.

Under the settlement agreements, Embraer must pay a $107 million penalty to the Justice Department, and more than $98 million in disgorgement and interest to the SEC.

After being subpoenaed by USA authorities in 2010, the company carried out an internal investigation of the sales in question.

The Justice Department said that Embraer earned profits almost U.S. $ 84 million on the aircraft sale to India.

Authorities in the Dominican Republic previously arrested a former defence minister and three others for allegedly accepting the $3.5 million bribe from Embraer in exchange for placing an order with the Brazilian aircraft manufacturer for eight Super Tucano aircraft.

The SEC complaint said that Embraer made more than $83 million in profit from the sales linked to bribes to officials in India, Saudi Arabia, Mozambique and the Dominican Republic.

Since it started collaborating with the investigation, Embraer had set aside $200 million for possible fines. "The company has learned from this experience and will be stronger as it moves forward and continues its almost 50 years of successful existence in which it has delivered more than 8,000 aircraft in over 90 countries".

The aerospace company admitted to a conspiracy to violate the FCPA and had wilfully failed to create internal accounting controls which could have prevented the corruption, the justice department was quoted as saying by AFP. The Dominican government said it used the aircraft to combat aerial drops of drugs from South America.

In the recent years, Embraer, the world's third-largest maker of commercial jets, has replaced much of its senior management, reinforced compliance efforts and curtailed use of third-party sales representatives, who drew suspicion in the deals under review.

Pakistan summons Indias Deputy High Commissioner and lodges a strong protest against "ceasefire violations" along the Working Boundary, says the Foreign Office here. "It later paid $5.76 million to Agent D pursuant to a false agency agreement singed in or around 2008".

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Brazilian aircraft maker settles bribery charges