Aircraft engine repair firm pays $14 million for bribing government officers

December 29, 2014

International law officials are cracking down on corporations and firms that break the rules by bribing legislators and governmental leaders. The latest example comes out of Texas, where a well-known aircraft maintenance company confessed to having participated in a backroom deal that aimed to skirt the Foreign Corrupt Practices Act.

Dallas Airmotive, Inc, which specializes in aircraft engine repair, admitted to federal officials on Dec. 10 that it bribed Latin American dignitaries in a bid to win a contract that only the government could provide, according to a release from the U.S. Department of Justice. In light of the confession, the company will avoid charges after agreeing to pay $14 million for running afoul of the FCPA.

The charges filed against the Grapevine, Texas-based overhaul firm included one count of conspiracy to violate the FCPA, as well as one count of disobeying the FCPA's anti-bribery provisions.

Based on testimony provided by Dallas Airmotive, the corrupt practices took place from 2008 to 2012, after the company bribed several government agencies throughout South America, including the Brazilian Air Force, the Peruvian Air Force, the Office of the Governor of the San Juan Province in Argentina, as well as the Governor's Office of the Brazilian State of Roraima. In return for government contracts, the company promised foreign officials various luxuries, such as monetary payments through third-party sources, paid vacations and "directly providing things of value," as noted in the DOJ release.

Corruption index high in several South American countries
White-collar crime is a major issue in parts of Latin America. A recent analysis from PricewaterhouseCoopers found that Venezuela, Paraguay, Ecuador, Guyana, Bolivia and Argentina have seen the highest prevalence of bribery and profiteering, as measured by PwC's Corruption Perception Index.

"Business owners need to understand that even though foreign officials are aware of the FCPA, you still need business processes in place to track and trace potential issues," said Scott Lewin, Invoiceware International CEO. "Many companies rely on local 3rd party tools to manage invoice and fiscal reporting requirements rather than their global ERP and accounting systems. This local bolt-on strategy creates visibility gaps, so the best course of action for a multinational is to configure their global ERP system to manage all invoicing and payment touch points across Latin America."

Compliance is the new trend in Latin America – so executives need to take a deeper look at their processes and how they are meeting compliance.  The SEC is definitely taking advantage of the visibility gained through mandated automation.


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