Embraer To Pay $205 Million For Settlement Of Corruption Charges In India And 3 Other Countries

Embraer, the Brazilian aircraft manufacturer will pay $205 million to the US and Brazilian authorities as a penalty for corruption charges in India, Mozambique, Saudi Arabia and the Dominican Republic.

According to the officials, Embraer will pay $107 million as a penalty to resolve the criminal charges in connection with bribing the government officials of Saudi Arabia, Mozambique and Dominican Republic. The company will also pay $98 Million in disgorgement and interest to the Securities and Exchange Commission (SEC) for falsely recording the payments in India through a fake agency agreement.

Embraer representatives admitted that top executives and employees paid bribes to various government officials in multiple countries to falsely represent the books and records of the company to secure the sales of aircraft to state-owned entities and governments of these countries.

Following are the four such transactions made by Embraer employees from 2007 to 2011:

1. $5.76 million were paid to an agent in India to secure a deal for three highly specialised aircraft to the Indian Air Force.
2. $3.52 Million were paid to Dominican Republic Officials to secure an aircraft deal.
3. $1.65 Million were paid to Saudi Arabian officials for another deal.
4. $800,000 was paid to government officials in Mozambique.

Aircrafts which were sold to all the four countries are:

1. Eight Super Tucano light attack planes to the Dominican Republic.
2. Three Surveillance Aircrafts to India.
3. Two E190 commercial jets to Mozambique’s LAM Airline.
4. Three E170 jets to an oil company in Saudi Arabia.

Embraer has made around $83 million profit due to these transactions and the payment was made from its US-based subsidiary via third party agents in all the four countries.

Now Embraer must employ an independent corporate monitor to oversee its operations till the next three years according to SEC’s guidelines.  

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25 October 2016
Rohan Jaitly