AAR Resolves $55.6 Million FCPA Enforcement Action
As highlighted in this prior post, in July, Julian Aires (an individual associated with a joint venture partner of AAR Corp. – a U.S. based aviation services company) pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions in connection with business dealings with South Africa Airways (SAA) as well as a contract involving Swissport and SAA.
As highlighted in this prior post, in August, Deepak Sharma (an agent of AAR and the former President of Integrated Solutions at AAR) pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions in connection with a bribery scheme involving Nepal Airlines Corporation.
Yesterday, it was AAR’s turn as the DOJ and SEC announced (here and here) an FCPA enforcement action against the company based on the same core conduct.
The enforcement action involved a DOJ component (net $26.4 million) and an SEC component ($29.2 million).
Another FCPA Enforcement Action Related To South Africa’s Broad-Based Black Economic Empowerment Program
It has been highlighted numerous times on these pages. The root cause of certain Foreign Corrupt Practices Act enforcement actions is a local law or regulation that force companies into a relationship that is not necessarily market driven – but a distortion of the market.
Pointing out this root cause is not meant to excuse the conduct at issue in an FCPA enforcement, but only to put it in the proper perspective.
As explained in this useful summary from Baker & McKenzie, South Africa’s “broad-based black economic empowerment (B-BBEE) is a policy and legislative framework which seeks to redress the historic economic inequalities created primarily as a result of the implementation of apartheid in South Africa.”
McKinsey Entity Resolves Net $61.425 Million FCPA Enforcement Action
The DOJ has announced that McKinsey and Company Africa (Pty) Ltd (“MCKINSEY AFRICA”), a wholly owned and wholly controlled subsidiary of McKinsey & Company (an international consulting firm) has resolved a Foreign Corrupt Practices Act enforcement action based on alleged bribery schemes in South Africa.
The conduct at issue largely focuses on Vikas Sagar (a citizen of India, a lawful permanent resident of the United States, a resident of South Africa) who was a partner and senior partner of McKinsey working in McKinsey’s office in Johannesburg, South Africa, and a stockholder, employee, and agent of McKinsey. In connection with the same conduct alleged in the McKinsey enforcement action, the DOJ also announced the unsealing of a guilty plea in which Sagar pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions. (The criminal charges against Sagar were filed in December 2022).
Individual Pleads Guilty To A Bribery Scheme Involving Nepal Airlines
Last month, Julian Aires (an individual associated with a joint venture partner of AAR Corp. – a U.S. based aviation services company) pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions in connection with business dealings with South Africa Airways (SAA) as well as a contract involving Swissport and SAA. (See here for the prior post).
It was noted that the enforcement action was likely the first of several related enforcement actions to come as AAR’s recent annual report disclosed FCPA scrutiny in South Africa as well as Nepal.
Sure enough.
Recently, Deepak Sharma (pictured) (a United Kingdom citizen and resident) pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions in connection with a bribery scheme involving Nepal Airlines Corporation (“NAC”), an alleged instrumentality of the Nepali government.
FCPA Enforcement Actions Related To South Africa’s Broad-Based Black Economic Empowerment Program
It has been highlighted numerous times on these pages. The root cause of certain FCPA enforcement actions is a local law or regulation that force companies into a relationship that is not necessarily market driven – but a distortion of the market.
Pointing out this root cause is not meant to excuse the conduct at issue in an FCPA enforcement, but only to put it in the proper perspective.
As explained in this useful summary from Baker & McKenzie, South Africa’s “broad-based black economic empowerment (B-BBEE) is a policy and legislative framework which seeks to redress the historic economic inequalities created primarily as a result of the implementation of apartheid in South Africa.”