In 2016, Embraer (a Brazil-based aircraft manufacturer with American Depositary Shares listed on the New York Stock Exchange) resolved a parallel DOJ / SEC Foreign Corrupt Practices Act enforcement action alleging improper conduct in the Dominican Republic, Saudi Arabia, Mozambique, and India (See here  for the prior post).
The net FCPA settlement amount was $187 million and in terms of Saudi Arabia it was alleged that “Embraer [largely through the conduct of Executive B] agreed to pay and did pay Saudi Arabia Official [described as “an official in a high-level decision-making position in a state-owned and controlled company in Saudi Arabia that performed a government function] more than $1.5 million to obtain a contract for the sale of three business jets, valued at approximately $93 million to Saudi Arabia Instrumentality.”
Yesterday, the DOJ returned to these allegations and announced  an enforcement action against Executive B, also known as Colin Steven (a U.K. citizen residing in the United Arab Emirates).
The overview portion of this criminal information alleges:
“From in or about November 2009, up to and including in or about April 2011, Colin Steven … engaged in an international conspiracy to bribe an official of the Kingdom of Saudi Arabia … in connection with the $93 million sale of jets from Steven’s employer, Embraer, to a company located in Saudi Arabia. As part of the scheme, Steven causes approximately $1.5 million in bribe payments to be made by Embraer to the Saudi Official through an intermediary company located in South Africa [described as an industrial valve and pump manufacturer, with no experience in the aircraft industry or in Saudi Arabia, partially owned by friends of Steven]. In exchange for those payments, the Saudi Arabia Official provided more favorable terms to Embraer in a sale of jets to the Saudi Arabia company. As a further part of the scheme, Steven arranged to and did receive a kickback from a portion of the bribe proceeds.”
According to the information, “the South Africa Company would perform no work on the transaction and would be used to facilitate and to disguise the payment to the Saudi Arabia Official.”
In terms of a U.S. nexus, the information alleges that in March 2010 Embraer and a U.S.-based subsidiary of the Saudi Arabia Company entered into an aircraft purchase agreement and that in December 2010, the South Africa Company submitted three invoices to Embraer, each in the amount of $550,000, for its purported commission. … and that payments were made through two wire transfers from Embraer RL’s [a wholly-owned subsidiary incorporated in Delaware] bank account in Manhattan, New York …”.
According to the information, Steven received approximately $129,935 in kickbacks transferred to his U.S. bank account.
The information also contains the following allegation.
“On or about December 19, 2014, Colin Steven was interviewed by an agent of the FBI. During that interview, when asked about one of the wire transfers he received from the South African Company in 2011, Steven falsely stated that the funds has been transferred to him by an executive of the South African Company for the purpose of buying real estate in connection with a potential business venture between Steven and the executive.”
Based on the above allegations, the information charges one count of conspiracy to violate the FCPA’s anti-bribery provisions, one count of violating the FCPA’s anti-bribery provisions, two counts of wire fraud, one count of money laundering conspiracy, one charge of money laundering, and one false statement charge.
As highlighted here , in 2014 Steven left Embraer and in the release Marco Túlio Pellegrini (President and CEO of Embraer Executive Jets) stated: “I … extend my gratitude to Mr. Steven and [another individual] for their instrumental roles in building Embraer Executive Jets’ presence in their respective markets, and for leading these seamless transitions.”
FCPA Institute - Philadelphia (October 18-19, 2018)
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