In running FCPA Professor, I search for Foreign Corrupt Practices Act content every day, 7 days a week, 12 months a year, 9 years running. In doing this, I have favorite sources and like reading some content better than others.
Transcripts of calls between investment analysts and corporate executives are always interesting as the Q&A sessions tend to be spontaneous and unscripted.
“Internal investigation to determine whether we may have violated the U.S. Foreign Corrupt Practices Act and other laws
Through its internal processes, Avianca Holdings discovered a business practice whereby company employees, which may include members of senior management, as well as certain members of the board of directors, provided things of value, which as of today Avianca Holdings believes to have been limited to free and discounted airline tickets and upgrades, to government employees in certain countries. Avianca Holdings commenced an internal investigation and retained outside counsel and a forensic investigatory firm to determine whether this practice may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”) or other potentially applicable U.S. and non-U.S. anti-corruption laws. Additionally, Avianca Holdings implemented policies designed to prevent such practice from occurring in the future. On August 13, 2019, Avianca Holdings voluntarily disclosed this investigation to both the U.S. Department of Justice and the SEC, and Avianca Holdings is cooperating with both agencies. On the same date, Avianca Holdings voluntarily disclosed this investigation to the Colombian Financial Superintendence through the National Registry of Securities and Issuers. Based on the progress of the matter to date, management has not provided for any potential liability that may result from the investigation or related regulatory proceedings.”
During an August 15th investor conference call, Adrian Neuhauser (Avianca Holdings S.A. – CFO) had the following exchange with an investor analyst.
ANALYST: I saw on Bloomberg that you are conducting internal probe regarding potential violations of the FCPA. I know this is a sensitive topic, especially, that — the news say that you were voluntarily disclose that to the SEC and DOJ this week. But if you could provide any more color, this would be super helpful.
NEUHAUSER: Yes. Look, we’re — it’s obviously, like you said, a sensitive topic. So we’re loathe to provide more detail than what’s in the document. But — and there is disclosure in the 6-K that was filed today on that. The company has had in place for a while, an investigation regarding certain business practices around tickets that were given out. And we are in the process of ensuring that none of those violated FCPA laws when they were doing that. This is a legacy issue. Additional controls have been put in place. And it’s not, it doesn’t target some — it doesn’t target business practices that are occurring today.
ANALYST: Perfect. And if I may, just a quick follow up. The news mentioned the potential involvement of members of the management team and the Board. The people related to this potential corruption issues, are they still at the company or not?
NEUHAUSER: Look, I don’t — there’s an implicit assumption in your statement, which is complicated to address. I’m not trying to take a position that something did or didn’t happen. The investigations that have taken place to date have not identified wrongdoing. And so this is — again, we first need to figure out if there was wrongdoing to then figure out if people that were involved in wrongdoing were — are still or not at the company, right?”
So, in the words of the Avianca’s CFO the company voluntary disclosed to the DOJ and SEC (and other authorities) even though “the investigations that have taken place to date have not identified wrongdoing.”
This is just plain ridiculous and irresponsible and if I were an Avianca shareholder or otherwise associated with the company I would have some serious questions of corporate management regarding this topic as well as FCPA counsel advising the company.