Tuesday, October 25, 2016

Embraer to Pay $205 Million to Settle Bribery Allegations: Brazilian aircraft maker reaches agreement with U.S. and Brazilian authorities

The Wall Street Journal
Updated Oct. 24, 2016 2:23 p.m. ET

SÃO PAULO—Brazilian aircraft maker Embraer SA reached an agreement with U.S. and Brazilian authorities to settle an investigation into alleged bribes paid to foreign officials, the U.S. Securities and Exchange Commission said Monday.

Under the settlement, Embraer agreed to pay a total of $205 million in compensation to end the investigation into whether the company violated the Foreign Corrupt Practices Act, or FCPA, regarding the sale of planes to various countries.

The SEC’s complaint alleges that Embraer made more than $83 million in profit as a result of bribe payments.

Embraer said in a separate statement that the sales of a total of 16 aircraft between 2007 and 2011 to Saudi Arabia, India, Mozambique and the Dominican Republic were investigated.

“The company acknowledges responsibility for the conduct of its employees and agents according to the facts ascertained in the investigation. Embraer deeply regrets this conduct,” the company said.

After being subpoenaed by U.S. authorities in 2010, the company carried out an internal investigation of the sales in question. In May 2015, Embraer started discussions with the U.S. Department of Justice for a possible resolution of the allegations.

Under the settlement, Embraer agreed to pay $107 million to the Justice Department as part of a deferred prosecution agreement, and another $98 million to the SEC.

In a separate statement, the U.S. Department of Justice provided some details about the investigation.

The Justice Department said the company paid $3.52 million to an “influential government official” in the Dominican Republic in 2008 to win a contract to sell eight military aircraft to the country’s air force .

The aircraft maker paid $1.65 million to win a Saudi Arabian contract for the purchase of three aircraft, paid $800,000 to win a contract to supply planes to a Mozambican airline, and paid $5.76 million to secure a contract to sell planes to the Indian Air Force, the Justice Department said.

The company in July reported a net loss of 337.3 million Brazilian reais ($102 million) in the second quarter, reversing a net profit of 399.6 million reais in the year-ago period.

During Monday’s trading session, Embraer shares were up 0.1% at 15.67 reais, while the main local stock market index, the Ibovespa, was unchanged from Friday.

Original article can be found here:   http://www.wsj.com

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