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 20 corporate FCPA enforcement actions against companies in the industry (broadly defined) in FCPA enforcement history resulting in approximately $860 million in settlement amounts. Last week’s enforcement action against Airbus (see here for the prior post) was merely the most recent example.
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.
The remainder of this post highlights FCPA enforcement actions against companies in the aviation industry broadly defined.
Even Though The Jurisdictional Basis For The Action Was “Limited,” Airbus Resolves $294 Million FCPA Enforcement Action In Connection With Broader Global Enforcement Action
The DOJ recently announced that Airbus (a France-based global provider of civilian and military aircraft) agreed to pay $3.9 billion to resolve foreign bribery, as well as Arms Export Control Act and International Traffic in Arms Regulations, enforcement actions in the U.S., France, and the United Kingdom.
As the DOJ acknowledged, Airbus “is neither a U.S. issuer nor a domestic concern, and the territorial jurisdiction over the corrupt conduct is limited.” As the DOJ further acknowledged, both France and the United Kingdom have a “significantly stronger” jurisdictional basis for resolving related matters.
Nevertheless, a portion of the global settlement amount includes a $294 million Foreign Corrupt Practices Act enforcement action. This post summarizes the enforcement action in which the DOJ charged Airbus in this information with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to violate the Arms Export Control Act and the International Traffic in Arms Regulations.
SEC Finds That Former Panasonic Executive Authorized Conduct Causing Company’s FCPA Violations, Another Former Executive Found To Engage In Improper Revenue Recognition Practices
As highlighted in prior posts (here, here and here) in April 2018 the DOJ and SEC announced a $280 million Foreign Corrupt Practices Act enforcement action against Japan-based Panasonic Corp. and a U.S. subsidiary Panasonic Avionics Corp. (PAC).
In the words of the government “between 2007 and 2013, PAC employees, including senior executives, engaged in a scheme to retain consultants for improper purposes other than for providing actual consulting services.”
Earlier this week, the SEC returned to the same core conduct to bring administrative actions (here and here) against Paul Margis (pictured – a former President and CEO of PAC) and Takeshi Uonaga (PAC’s former CFO). The Margis action finds that he authorized various conduct giving rise to the company’s FCPA liability, whereas the Uonaga matter is materially different in that it is a revenue recognition matter.
United Technologies Corp. Resolves $13.9 Million Enforcement Action
Yesterday, the SEC announced that United Technologies Corporation resolved a $13.9 million Foreign Corrupt Practices Act enforcement action.
The conduct at issue concerned Otis Elevator Co. (a wholly-owned subsidiary of UTC), Pratt & Whitney (an operating division of UTC), and International Aero Engines (a joint venture of five aerospace companies including Pratt & Whitney) regarding a Russian and Azerbaijani improper payment scheme, a China aviation scheme, improper payments for Otis Elevator sales in China, and leisure travel for foreign officials from several countries including China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.
DOJ Announces Criminal Charges And Plea Agreements In Connection With Mexican Aviation Bribery Scheme
This recent post highlighted the many Foreign Corrupt Practices Act enforcement actions involving the aviation industry.
Add another to this long list as yesterday, the DOJ announced that criminal charges “were unsealed against six individuals, all of whom have pleaded guilty for their involvement in schemes to bribe Mexican officials in order to secure aircraft maintenance and repair contracts with government-owned and controlled entities, and two for conspiring to launder the proceeds of the schemes.”
The criminal FCPA conspiracy charges were against four individuals: Daniel Perez, Kamta Ramnarine, Victor Valdez, and Douglas Ray.