A Stay-Out-of-Jail-Free-Card for the business aviation industry



Paul P. Jebely, William M. Sullivan, Jr. and Fabio Leonardi provide a short roadmap for business entities and executives who want to understand and ensure compliance with the Foreign Corrupt Practices Act (FCPA).

The private aviation industry operates in a particularly dangerous minefield for FCPA violations, which can lead to penalties reaching into the millions of dollars and even prison time for individuals. This results from a confluence of factors inherent in the very nature of a global industry built around an ecosystem of “airborne opulence” that rewards hyper-aggressive marketing and promotion.

Doing business in this industry generally requires extensive interaction with government agencies or, most often, individuals who may be considered “foreign officials” under the US Government’s broad interpretation of such term for FCPA purposes. Thus, opportunities for FCPA-related business risk abound, especially where there is a deep-seated cultural tradition of gift giving and entertainment as an acceptable, if not required, means of conducting business.

Paul Jebely

The FCPA and Private Aviation: A Love Story

The FCPA turns 40 this year, and not many realize that one of the very first enforcement actions under the FCPA involved private jets – specifically, sales of Gulfstream II aircraft secured through corrupt payments by a third-party agent of a leading aircraft manufacturer. Private aviation is an industry that U.S. regulators and enforcement agencies have brought under their proverbial magnifying glass from time to time, knowing well what they would likely find. Indeed, over just the past few years, the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) have opened at least eight aviation-related FCPA investigations around the globe resulting in seven enforcement actions and prosecutions. And the consequences have been dire: about four senior executives and sales managers associated with various aviation businesses have been charged, and over $654 million in fines and penalties have been paid over to the US. Government as a result of civil settlements, plea agreements and other criminal resolutions. Thus, to thrive (and survive) in an increasingly turbulent global aviation industry, it is paramount for businesses and company executives alike to understand how to prevent FCPA violations and manage related risks.

Fabio Leonardi

What is the FCPA?

The FCPA is a US statute that generally criminalizes the bribery of foreign officials anywhere in the world by companies subject to its provisions. To date, prosecutions and enforcement actions under the FCPA have been brought against US publicly traded companies, US companies doing business abroad and, importantly, foreign companies falling within the jurisdiction of the FCPA. Indeed, foreign companies can be subject to the FCPA’s provisions as well, and US criminal law enforcement authorities have made clear their intention to cast a wide net in enforcing the FCPA around the globe.


As previously noted, the FCPA has been the basis for hundreds of enforcement actions, billions of dollars in criminal and civil fines, and many jail terms – though trials have been few.

The FCPA is generally divided into two sections, commonly known as the Anti-Bribery Provisions and the Accounting Provisions. The Anti-Bribery Provisions generally prohibit payments, or offer of payment, of “anything of value” to a foreign government official, either directly or directly, in order to corruptly influence the official in some official act to secure improper an advantage in an attempt to obtain or retain business.

The DOJ and the SEC interpret the FCPA quite broadly. For example, a “anything of value” has been deemed to include items such as travel expenses, loans and gifts given at business meetings. Similarly, the term “foreign official” has been interpreted to include a member of a legislative body, a member of a royal family or officials of state-owned enterprises such as air navigation authorities.

The Long Arm of the (US) Law

Because the aviation business is highly competitive and international, US prosecutors and regulators have historically considered it as a major target industry for criminal and civil FCPA investigations, prosecutions and enforcement actions. Indeed, due to the interrelated industry relationship with governments around the world, corruption risks have generally be found to abound in connection with selling, leasing, maintaining, servicing or supplying aircrafts as well as managing and servicing airports and providing other aviation-related services and products. Moreover, the risk of a potential US Government anti-corruption inquiry into business operations of aviation industry participants has been further heightened by recent pronouncements by the SEC and the DOJ, which emphasized the key role that international cooperation will continue to play in enforcing anti-corruption laws. In fact, for years, US authorities have been establishing relationships with their foreign counterparts, routinely coordinating global FCPA enforcement investigations with international regulators and law enforcement agencies. Thus, companies and individuals operating in the aviation industry should know how to identify potential FCPA concerns and, accordingly, mitigate any related risks.

Identifying and Mitigating FCPA Risks

The existence and effectiveness of a business’s compliance program and the extent of the company’s efforts to improve it are among the factors that US prosecutors and the SEC consider in investigating, charging and prosecuting FCPA violations. In addition, individual executives such as ethics and compliance officers may themselves become the target of FCPA enforcement actions for failures to establish, monitor and properly implement effective compliance programs. Consequently, a company’s investment of time and resources in corporate compliance is not only necessary to avoid potential embarrassment and penalties. it also serves as an insurance policy to protect the organization and its employees against potential allegations of criminal intent or wilful ignorance.

For instance, among other things, aviation industry businesses should have in place comprehensive global FCPA compliance policies, establish training and monitoring programs to ensure compliance and identify potential FCPA risks and ensure that agreements with third-party agents, service providers and joint-venture partners require compliance with anti-corruption legislation.

William Sullivan

Thus, as FCPA enforcement remains a top priority of the DOJ and the SEC, business and company executives operating in the aviation industry may wish to align (or design) their compliance policies and procedures so that in the event of a potential U.S. Government investigation, prosecutors and regulators can easily identify how the company and its employees have satisfied FCPA corporate compliance standards. Moreover, while helping to prevent potential criminal and regulatory investigations, prosecutions, enforcement actions, convictions, fines and penalties, targeted FCPA policies and procedures as well as effective internal controls will also help companies protect against shareholder losses and civil lawsuits that naturally follow a public criminal or regulatory investigation for FCPA violations.

Real and significant risks

FCPA risks in the private aviation industry market participants are real and significant. Moreover, because the DOJ and the SEC are opening additional FCPA investigations around the world, and as evidenced by the US Government’s latest enforcement actions within the aviation industry, ignorance of the law or inaction are no longer options.

Paul P. Jebely is ranked as the top private aviation lawyer in Asia and among the top four in the world by Chambers Global. He has closed over $10 billion in deals on behalf of lenders, UHNWIs and aircraft operators, and handled many restructuring, disputes and enforcement matters. He is qualified to practice law in the US, UK and Canada, and serves as the managing part of Pillsbury’s Hong Kong office and Co-Chair of the firm’s global asset finance practice.

William M. Sullivan, Jr., a former U.S. federal prosecutor, is a Partner and the Co-Chair of Pillsbury’s Government Investigations and White Collar Defense group. He is based in Washington, DC and may be reached at [email protected]

Fabio Leonardi, a Senior Associate with Pillsbury’s Government Investigations and White Collar Defense group, previously served with the SEC’s Division of Enforcement. He is based in Washington, DC and may be reached at [email protected]