Embraer settles bribery allegations

WASHINGTON, Oct. 26 (UPI) -- Embraer, the Brazilian aircraft manufacturer, is paying more than $205 million to resolve alleged violations of the U.S. Foreign Corrupt Practices Act.

According to the U.S. Securities and Exchange Commission, Embraer had allegedly made more than $83 million in profits as a result of bribe payments from its U.S.-based subsidiary through third-party agents to foreign government officials.

The SEC said $3.52 million in bribes were paid to an official in the Dominican Republic's air force to secure a military aircraft contract in that country, and $1.65 million in bribes were routed to an official in Saudi Arabia to win business there.

An alleged $800,000 payment was made at the behest of a Mozambican government official as a condition of obtaining a contract with a state-owned airline in that country. About $5.76 million was allegedly paid to an agent in India in connection with the sale of three highly specialized military aircraft for India's air force, and the payments falsely recorded in Embraer's books and records as part of a consulting agreement that wasn't legitimate.

"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," said Andrew J. Ceresney, Director of the SEC Enforcement Division.

Under the settlement, Embraer must pay a $107 million penalty to the U.S. Justice Department as part of a deferred prosecution agreement, and more than $98 million in disgorgement and interest to the SEC. Embraer may receive up to a $20 million credit depending on the amount of disgorgement it will pay to Brazilian authorities in a parallel civil proceeding in Brazil.

Embraer must retain an independent corporate monitor for at least three years, the SEC said.

"This inquiry began in 2010 when Embraer was questioned by American authorities regarding potential nonconformities related to certain commercial transactions abroad," Embraer said in a statement. "The company then undertook a wide internal investigation, led independently by external law firms.

"The company acknowledges responsibility for the conduct of its employees and agents according to the facts ascertained in the investigation," it said. "Embraer deeply regrets this conduct."