Brazil’s second-largest airline, Gol Linhas Aéreas Inteligentes, will pay $41 million to resolve parallel bribery investigations in the U.S. and Brazil, U.S. authorities said Friday.
The U.S. Department of Justice said it will defer prosecution of Gol for violating the Foreign Corrupt Practices Act after Gol agreed to pay a $17 million criminal penalty and $70 million to settle charges by the Securities and Exchange Commission.
Due to Gol’s financial condition and inability to pay the fines in full, the SEC and the DOJ waived payment of all but $24.5 million and $17 million of Gol’s payment obligations, respectively. Gol will pay about $3.4 million in additional penalties or restitution to Brazilian authorities.
The company reported a sharp second-quarter net loss in late July, primarily due to foreign exchange fluctuations.
Gol bribed prominent Brazilian government officials to pass legislation that gave Brazilian airlines favorable payroll tax and aviation tax reductions and then falsely reported the $3.8 million in illegal payments as legitimate expenses, including for advertising and other services, according to the SEC and Justice Department.
The scheme was allegedly initiated by a Gol board member.
Gol recently launched its first all-cargo operation with a 737-800 converted freighter hauling goods for online retailer Mercado Libre. It plans to have six leased aircraft in service by next year.
In determining to accept the offer, the SEC said it considered Gol’s cooperation and remedial acts, which included disciplining the Gol director who orchestrated the scheme and enhancing internal accounting controls and anti-corruption policies and procedures.
Foreign companies are subject to the FCPA if they use any instrument of U.S. interstate commerce in committing an FCPA violation, such as sending an email, fax or wire transfer from or through the United States. And making a corrupt payment while having an agent or physical presence in the U.S., such as local offices, allows the FCPA to be applied to the foreign parent company.
American Airlines has a commercial partnership with Gol and owns 5.2% of the company.
Gol and Colombian airline Avianca are working to come under a single ownership called Abra Group Ltd. Under the deal, Gol and Avianca would continue to function as separate brands.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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