Brazilian aircraft manufacturer Embraer, has agreed to pay over USD 205 million to resolve charges of corruption and making bribe payments to officials in foreign nations, including USD 5.76 million allegedly paid to an agent in India in connection with the sale of three military aircraft for Indian Air Force.
The corruption charges relate to alleged payment of USD 5.76 million to an agent in India in kickbacks for clinching a deal for the sale of three aircraft for the IAF’s Airborne Early Warning and Control System (AWACS).
The CBI has already registered an FIR in the case.
Embraer entered into the resolution to resolve criminal charges and agreed to pay a penalty of more than USD 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.
Under the settlement, apart from the USD 107 million penalty to the Justice Department as part of a deferred prosecution agreement, Embraer must also pay more than USD 98 million in disgorgement and interest to the Securities and Exchange Commission (SEC).
According to the company's admissions, Embraer executives and employees paid bribes to government officials and falsified books and records in connection with aircraft sales to foreign governments and state-owned entities in multiple countries.
An alleged payment of USD 800,000 was made at the behest of a Mozambican government official as a condition of obtaining a contract with a state-owned airline in that country.
Approximately USD 5.76 million was allegedly paid to an agent in India in connection with the sale of three highly specialised military aircraft to Indian Air Force, and the payments were falsely recorded in Embraer’s books and records as part of a consulting agreement that was not 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.Andrew J Ceresney, Director of the SEC Enforcement Division.
Kara N 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.”
Under the settlement, Embraer must pay a USD 107 million penalty to the Justice Department as part of a deferred prosecution agreement, and more than USD 98 million in disgorgement and interest to the SEC.
Embraer may receive up to a USD 20 million credit depending on the amount of disgorgement it will pay to Brazilian authorities in a parallel civil proceeding in Brazil.
Embraer must retain an independent corporate monitor for at least three years, the statement said.
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