Brazilian airplane maker to pay $205M over bribery allegations

U.S. and Brazilian federal authorities ordered one of the world’s largest airplane makers to pay over $205 million for allegedly bribing government officials for contracts in the Dominican Republic, Saudi Arabia and Mozambique. 

The Securities and Exchange Commission, the Department of Justice and Brazilian authorities said Embraer S.A., Brazil’s largest planemaker, made over $83 million in profits stemming from contracts secured via bribes. The aircraft maker used third-party agents to make payments from its U.S.-based subsidiary, the SEC said.

{mosads}Embraer allegedly paid a Dominican Republic air force official $3.52 million, a Saudi official $1.65 million and a Mozambican official $800,000 to secure business in the three countries.

The planemaker created false books and records to cover up the bribes, according to the SEC.

In addition, Embraer is alleged to be involved in a fraudulent accounting scheme in India. The aircraft maker paid $5.76 million to an agent in India to secure the sale of three specialized military aircraft for the Indian air force, government officials said.

Embraer is accused of falsely recording the transaction as a consulting agreement on its books. 

“As alleged in our complaint, Embraer realized significant revenues by surreptitiously using third parties to mask bribes paid to government officials with influence over contracts it was competing to win,” SEC Enforcement Division Director Andrew Ceresney said in statement Monday.

The aircraftmaker must pay the Justice Department $107 million as part of an agreement to defer prosecution. The SEC will receive over $98 million in disgorgement and interest fees, but Embraer may receive up to $20 million in credit depending on the amount it pays to Brazilian authorities. 

The company must be monitored by an independent third-party for over three years. 

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