Mozambique: Portuguese businesses look to expand as post-election recovery gains ground
Embraer guilty of bribing officials, including in Mozambique – AIM report
8:02 CAT | 25 Oct 2016
Reuters (File photo) / Brazilian aircraft manufacturer Embraer unveils its new E190-E2 in Sao Jose dos Campos, Brazil, February 25, 2016
US Assistant Attorney General Leslie R. Caldwell announced on Monday that the Brazilian aircraft manufacturer Embraer has agreed to pay a penalty of more than US$107 million in connection with schemes involving the bribery of government officials in Mozambique, the Dominican Republic, and Saudi Arabia, and to pay millions more in falsely recorded payments in India via a sham agency agreement.
“Embraer paid millions of dollars in bribes to win government aircraft contracts in three different continents,” said Caldwell, in a statement issued by the US Justice Department. “But this prosecution shows that the Criminal Division (of the Justice Department) will hold accountable those who treat corruption as a mere cost of doing business”.
The investigation was the joint work of the US, Brazilian and Saudi authorities. “Bribe payers and bribe takers alike have been brought to justice for their wrongdoing,” declared Caldwell.
“Embraer tried to bribe their way into several profitable aircraft contracts around the world,” said the Assistant Special Agent in charge of the case, William Maddalena. “Instead of reaping a nice profit, their criminal conduct earned the Brazilian aircraft manufacturer a substantial penalty that more than wiped out their gains from these contracts. Crime does not pay!”
Under questioning, Embraer admitted that its executives had bribed foreign government officials and had falsified records in connection with aircrafts sales in several countries.
The Mozambican connection was a bribe of US$800,000 paid via what the Justice Department describes as “a false agency agreement with an intermediary designated by a high-level official” in Mozambique Airlines (LAM). The purpose of the bribe was to secure LAM’s agreement to purchase two aircraft from Embraer for approximately US$65 million. So the Mozambican public now knows the real reason why there are Embraer aircraft in LAM’s fleet.
Other crimes that Embraer admitted to include a bribe of US$3.52 million to a government official in the Dominican Republic to secure a contract to sell the Dominican Air Force eight military aircraft for approximately US$92 million, and a bribe of US$1.65 million to an official at a Saudi Arabian company to secure the purchase of three Embraer aircraft for about US$93 million.
Embraer earned profits of nearly US$84 million on the aircraft sales secured by bribes. Those profits have been wiped out by the US$107 million payment.
The Justice Department says that Embraer entered into a three-year deferred prosecution agreement (DPA) to resolve the case. As part of the DPA, Embraer admitted to its involvement in a conspiracy to violate anti-bribery and books and records provisions and to its ”willful failure to implement an adequate system of internal accounting controls”.
The full cost to Embraer of these cases is much higher – the company has also reached a settlement with the US Securities and Exchange Commission which will cost it over US$98 million, and it will pay the Brazilian authorities US$20 million.
The Brazilian authorities have charged 11 individuals for their alleged involvement in Embraer’s misconduct in the Dominican Republic, while the Saudi authorities have charged two individuals for their alleged involvement in Embraer’s misconduct in Saudi Arabia. Nobody has been charged in Mozambique, and the LAM official involved has so far not been named.
Court documents cited by the Bloomberg agency say that the initial bribe offered by Embraer to secure the Mozambican purchase was between US$100,000 and US$160,000. This was rejected as far too low.
“It would have been less insulting to give nothing,” the unnamed Mozambican official told an Embraer executive, according to the court documents. The official suggested a bribe of a million dollar, but apparently settled for US$800,000.
Embraer has issued an apology. “The company acknowledges responsibility for the conduct of its employees and agents according to the facts ascertained in the investigation,” Embraer said in a statement. “Embraer deeply regrets this conduct. The company has learned from this experience and will be stronger as it moves forward.”
Source: AIM
Show comments
Also read
Leave a Reply
Be the First to Comment!
You must be logged in to post a comment.
You must be logged in to post a comment.