Anyone involved in international transactions will have heard about the US Foreign Corrupt Practices Act (FCPA). But a recent settlement in a case involving the sale of new business jets is a good reminder of the global reach of the US and the perseverance of the Department of Justice’s investigators.
In December, Colin Steven, former vice president for Europe, Middle East and African sales at Embraer Executive Jets, pleaded guilty to violating the FCPA, conspiracy to violate the FCPA, wire fraud, conspiracy to commit wire fraud, money laundering, conspiracy to launder money, and making a false statement. He has not yet been sentenced.
The case dates back to 2009 when Steven was trying to sell three aircraft to the national oil company of Saudi Arabia. They were looking to buy pre-owned jets but he agreed a deal where a payment of $1.5 million would be made to an official at the oil company in return for them buying new jets. The official agreed to pay Steven a kickback with the money paid through a South African company. Embraer delivered the aircraft in late 2010 in a deal worth $93 million and Steven eventually received $129,935.
Steven has not been sentenced yet but the guilty plea follows years of work by the Department of Justice and the FBI. In October 2016 Embraer agreed to a deferred prosecution agreement with the DoJ. Since then Brazilian authorities have charged 11 individuals for their alleged involvement in Embraer’s misconduct in the Dominican Republic. Saudi Arabian authorities have charged two individuals for their alleged involvement in the deal with Steven.
You can read more about the case here.
This is not the first time than a manufacturer has been found wanting. Since the Embraer settlement, there have been cases involving Rolls-Royce engine sales to airlines and the UK Serious Fraud Office is investigating Airbus.
Steven was a popular, well respected member of the aircraft sales community who made a stupid mistake. No one is condoning the bribe but former colleagues and competitors are broadly sympathetic.
There is a saying that you should only do a deal if you are happy knowing it could be on the front page of a newspaper. This is not strong enough. Instead, before agreeing to a transaction, imagine sitting in a court while every document is dissected by a prosecutor working for the DoJ.
Have a great weekend
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