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Embraer agrees to pay US $205 million to settle bribery charges

Brazilian aircraft manufacturer Embraer will pay the US more than $205 million to settle bribery allegations, US regulators and the company announced on 24 October.

Under the agreement reached with both US and Brazilian authorities, Embraer will pay the justice department $107 million as a penalty for one count of conspiracy to violate the Foreign Corrupt Practices Act’s anti-bribery and records provisions, the company says in a statement.

The penalty also includes $98.2 million in interest to the Securities and Exchange Commission (SEC), but Embraer could receive an up to $20 million credit depending on the disgorgement the company will pay to Brazilian authorities, the SEC says.

The payment caps off a six-year investigation by the SEC after the commission probed the company for suspicions of violating the FCPA. The bribery scheme garnered Embraer more than $83 million in profits.

The SEC alleges Embraer made bribe payments from its US-based subsidiary through third-party agents to foreign government officials in the Dominican Republic and Saudi Arabia, according to the commission.

Embraer also allegedly created false books to conceal the payments and the company’s scheme allegedly extended to false accounting in India. The company reportedly paid $5.76 million to an agent in India connected with the sale of three specialised military aircraft for India’s air force, and recorded those payments as consulting fees in Embraer’s books.

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In the Dominican Republic, the $3.52 million in payments to air force officials reportedly involved the sale of Super Tucano light attack aircraft. Embraer routed another $1.65 million in bribe payments to an official in Saudi Arabia to win a contract there, the SEC says. Another $800,000 was spent on a Mozambican government official as a quid pro quo for a contract with a government-owned airline.

The roughly $200 million in penalties almost equals what Embraer had set aside in July for the pending settlement agreement with the SEC. The Department of Justice agreed to defer prosecution for three years, and the company will be monitored for up to three years to prevent future FCPA violations, Embraer says in a statement.

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