On September 15, Brazilian airline GOL Linhas Aéreas Inteligentes S.A. ("GOL") agreed to pay more than $41 million to resolve parallel bribery investigations by criminal and civil authorities in the United States and Brazil. GOL's offenses were investigated in parallel by the U.S. Department of Justice ("DOJ") Fraud Section, the U.S. Securities and Exchange Commission ("SEC") FCPA Section, and Brazilian authorities (the Controladoria-Geral da União and the Brazilian Attorney General's Office).
According to the deferred prosecution agreement ("DPA") , GOL, through its director and intermediary, corruptly offered and paid approximately 3.8 million in bribes to Brazilian government officials with the goal of getting two pieces of legislation passed by the National Congress of Brazil and the Legislative Chamber of the Federal District of Brasilia. These pieces of legislation involved certain payroll tax and fuel tax reductions that would financially benefit GOL. Furthermore, the company admittedly entered into fraudulent contracts with third-party vendors to generate and conceal the necessary funds. Finally, GOL also falsely recorded the sham payments in GOL's books.
Based on these facts, GOL entered into a three-year deferred prosecution agreement ("DPA") with the DOJ (see Press Release) and a settlement with the SEC (see Press Release), agreeing to pay the following amounts:
- A reduced criminal penalty of 17 USD million pursuant to the DPA (with 1.7 USD million credit towards the payment to Brazilian authorities).
- A reduced penalty of 24.5 USD million to the SEC.
- A criminal penalty of 3.4 USD million to Brazilian authorities.
The DOJ penalty reflects a 25% reduction off the applicable guidelines fine range, acknowledging the company's full cooperation and remedial measures already taken during the investigation period (note that the initial penalty was over 87 USD million). Further, given the financial condition of the company, the DOJ agreed to reduce the penalty as per the DOJ's inability to pay guidance. The SEC also agreed to considerably reduce the initial fine (70 USD million).
This is the third SEC enforcement action and fourth DOJ case this year that relates to Brazilian entities. This case reinforces the U.S. government trend to continue investigating Brazilian-related bribery. In addition, this highlights the benefits resulting from remedial action and full cooperation, while calling for strong FCPA-related compliance programs focusing on changing compliance culture.
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