NOT Flying Under The Radar – The Many FCPA Enforcement Actions Against Companies In The Aviation Industry
When compiling a list of the industries that have the highest Foreign Corrupt Practices Act risk, the aviation industry may not come to mind.
However, it should because, as highlighted in this post, there have been over 20 corporate FCPA enforcement actions against companies in the industry (broadly defined) in FCPA enforcement history resulting in approximately $1.2 billion in settlement amounts.
In fact, the aviation industry was front and center in “The Story of the Foreign Corrupt Practices Act” as Lockheed’s payments to Japanese Prime Minister Tanaka, Prince Berhard (the Inspector General of the Dutch Armed Forces and the husband of Queen Juliana of the Netherlands) and Italian political parties was arguably the most high profile example of foreign corporate payments Congress learned about in the mid-1970’s which motivated it to enact the FCPA.
Individual Pleads Guilty To FCPA Charge In Connection With Bribery Scheme Involving South African Airways
In 2016, AAR Corp. (a U.S. based aviation services company) announced that it had teamed with a joint venture partner – JM Aviation South Africa (Pty) Ltd. – to secure a five year contract to provide inventory management and repair services to South Africa Airways Technical (SAAT) Ltd. (a wholly-owned subsidiary of South African Airways – SAA).
Recently, the DOJ charged Julian Aires (a U.S. citizen who resided in San Diego and associated with JM Aviation South Africa) with conspiracy to violate the FCPA’s anti-bribery provisions in connection with an SAAT contract as well as another contract involving Swissport (an airport ground services and air cargo handling company) and SAA.
According to the court docket, Aires has pleaded guilty.
Brazilian Airline Bribes Brazilian Officials – U.S. Collects Net $38.1 Million In FCPA Enforcement Action
Yesterday, the DOJ and SEC (see here and here) announced a parallel Foreign Corrupt Practices Act enforcement action against Gol Linhas Aereas Inteligentes S.a. (GOL) – an airline headquartered in Sao Paulo, Brazil with shares traded on the New York Stock Exchange.
The DOJ component involved a criminal information against GOL charging conspiracy to violate the FCPA’s anti-bribery and books and records provisions resolved through a deferred prosecution agreement in which the company agreed to pay net $15.3 million. The SEC component involved an administrative order against GOL finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions pursuant to which the company is expected to pay net $22.8 million.
Panasonic Corp. And Related Entity Resolve $280 Million Avionics Industry FCPA Enforcement Action
Yesterday, the DOJ and SEC announced (here and here) a parallel Foreign Corrupt Practices Act enforcement action against Japan-based Panasonic Corp. and a U.S. subsidiary Panasonic Avionics Corp. (PAC).
As stated in the enforcement action, Panasonic was an issuer until April 2013 and again “for a brief period between 2015 and 2016 as a result of a share swap that retriggered Panasonic’s obligation to file its financial statements with the SEC.”
As highlighted in this post, the enforcement action consisted of:
Not Flying Under The Radar – The Many FCPA Enforcement Actions Against Companies In The Aviation Industry
When compiling a list of the industries that have the highest Foreign Corrupt Practices Act risk, the aviation industry is probably not going to be near the top of many lists.
However, it should be because as highlighted in this post there have been approximately 15 corporate FCPA enforcement actions against companies in the industry (broadly defined) throughout FCPA enforcement history. Last week’s enforcement action against Embraer (see here and here for prior posts) was merely the most recent example, albeit most high-profile given the settlement amount.
Indeed, the aviation industry was front and center in “The Story of the Foreign Corrupt Practices Act” as Lockheed’s payments to Japanese Prime Minister Tanaka, Prince Berhard (the Inspector General of the Dutch Armed Forces and the husband of Queen Juliana of the Netherlands) and Italian political parties was arguably the most high profile example of the foreign corporate payments problem Congress learned about in the mid-1970’s which motivated it to enact the FCPA.