The Wall Street Journal
By Joe Palazzolo and Rogerio Jelmayer
Sept. 23, 2014 3:57 p.m. ET
Brazilian authorities have filed a criminal action against eight Embraer SA employees accusing them of bribing officials in the Dominican Republic in return for a $92 million contract to provide the country's armed forces with attack planes.
The criminal complaint, filed under seal and reviewed by The Wall Street Journal, marks one of the first known efforts by Brazil to prosecute its citizens for allegedly paying bribes abroad, a milestone achieved with help from the U.S. Department of Justice and the U.S. Securities and Exchange Commission.
The U.S. agencies are also investigating the company's dealings in the Dominican Republic and elsewhere and have provided their Brazilian counterparts with evidence, according to a request last year for legal assistance from Brazilian prosecutors.
Embraer, one of Brazil's highest-profile companies, is the world's third-largest commercial aircraft manufacturer by sales and employs more than 18,000 people at its plants in Brazil, China, Portugal, France and the U.S. Its shares trade on the New York Stock Exchange.
"Because this matter is subject to an ongoing investigation in Brazil and the U.S., the company cannot comment further on any aspect of the case, including with respect to the proceeding in Brazil, where the Company is not a party to the investigation," Embraer said in an emailed statement.
Embraer disclosed in 2011 that it was under investigation in the U.S. for possible violations of the Foreign Corrupt Practices Act, a heavily enforced anticorruption law. The investigation is ongoing, and because its shares trade in New York and because some of the alleged payments passed through the U.S., according to the legal-assistance request, the U.S. has jurisdiction to investigate Embraer.
A spokesman for the Justice Department and a spokeswoman from the SEC declined to comment.
Brazilian prosecutors filed the 31-page complaint in a criminal court in Rio de Janeiro in August, the first step in a criminal prosecution. A spokesman for the Brazilian prosecutors' office declined to comment on the case.
The complaint alleges that Embraer sales executives agreed to pay a $3.5 million bribe to a retired Dominican Air Force colonel, who then leaned on legislators to approve the deal and a financing agreement between the Dominican Republic and the National Economic and Social Development Bank. The sale was completed and the aircraft were delivered.
The retired colonel, Carlos Piccini Nunez, was serving as the Dominican Republic's director of special projects for the armed forces in 2008, around the time of the contract negotiations. The contract provided the Dominican Republic with eight Embraer Super Tucanos, turboprop attack support aircraft that have been a darling of air forces in developing countries for their low maintenance and affordability.
The Dominican Republic Air Force and the country's defense ministry didn't respond to requests to speak with Mr. Piccini.
The criminal complaint alleges that an Embraer vice president for sales, Eduardo Munhos de Campos, promised to pay the bribe, and that he was assisted in arranging the payments by Orlando Jose Ferreira Neto, another vice president; Embraer regional directors Acir Luiz de Almeida Padilha Jr., Luiz Eduardo Zorzenon Fumagalli and Ricardo Marcelo Bester ; and managers Albert Phillip Close, Luiz Alberto Lage da Fonseca and Eduardo Augusto Fernandes Fagundes.
Embraer declined to say whether they are still employed at the company. Several of them appear to have moved on based on LinkedIn profiles. They did not return requests for comment or could not be reached. Their lawyers in Brazil could not be identified.
U.S. lawyers for Messrs. Munhos and Fumagalli declined to comment. A U.S. lawyer for Mr. Close, Danny Onorato, said, "We are aware of the criminal complaint in Brazil and we are studying it." It wasn't clear whether the others had retained U.S. lawyers.
The Embraer employees are charged in the Brazilian complaint with corruption in international transactions, which carries as many as eight years in prison upon conviction, and money laundering.
The complaint alleges that "from all indications" part of the $3.5 million bribe was destined for a Dominican senator, who is not named in the document.
Emails excerpted in the criminal complaint appear to show Embraer executives attempting to make direct payments to three shell companies allegedly designated by Mr. Piccini. But Embraer's compliance department prevented the full transfer in 2009, forcing the sales team to devise a new plan, the complaint says.
The group allegedly concealed the balance of bribe payments by booking them as consulting fees to a middleman in a deal to sell aircraft to the Kingdom of Jordan that never happened, according to the criminal complaint.
- Source: http://online.wsj.com
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