DOJ and SEC Obtain $41 Million Settlement from Brazilian Airline for FCPA (Part I of II) Violations | The Volkov Legal Group

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The Department of Justice and the Securities and Exchange Commission have reached a $41 million settlement with GOL Linhas Aéreas Inteligentes SA (“GOL”) to settle criminal and civil foreign bribery charges.

The GOL entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ in exchange for payment of a $17 million criminal penalty. The DOJ credited $1.7 million of this fine against a $3.4 million fine that the GOL agreed to pay to law enforcement authorities in Brazil to resolve the charges in Brazil.

In a separate resolution, the GOL agreed to pay $24.5 million over two years to the SEC. The SEC’s original settlement calculation was $70 million, but it was reduced to $24.5 million based on GOL’s financial situation.

Between 2012 and 2013, the GOL paid approximately $3.8 million in bribes to foreign officials in Brazil to secure passage of two pieces of legislation favorable to the GOL. Specifically, the legislation provided reductions in payroll taxes and fuel taxes that benefited GOL (as well as other Brazilian airlines).

Interestingly, the bribery scheme was carried out, with the help of others, by a GOL board member. To fund the program, the GOL entered into fictitious contracts with various entities linked to Brazilian officials. GOL made false entries in its books and records as a result of these transactions. GOL listed the expenses as advertising and other expenses.

The DOJ resolution did not include the appointment of an independent compliance monitor. The GOL will continue to improve its compliance program and will submit regular reports to the DOJ and the SEC regarding corrective actions and the implementation of compliance measures.

The DPA regulation includes specific certification requirements. First, at the end of the three-year DPA, the CEO and CFO of GOL are required to certify that the company has complied with all disclosure requirements under the DPA. Second, three days prior to the expiration of the three-year DPA, GOL’s CEO and CCO are required to certify that GOL has implemented a compliance and ethics program that is “reasonably designed” to prevent and detect future violations.

Applying the company’s law enforcement policy factors, the DOJ considered the nature, severity, and pervasiveness of the violation; The GOL was fully recognized for its cooperation, which included the timely provision of facts obtained through the GOL’s internal investigation, the review of voluminous documents, the hearing of witnesses and the testing of more than two thousand transactions. .

The GOL quickly corrected its compliance program and implemented a comprehensive anti-corruption compliance program. GOL created a separate compliance department, hired a new CCO, implemented a robust third-party risk management system, and terminated its relationship with all third parties involved in the corruption scheme. The GOL also terminated its relationship with the member of its board of directors who carried out much of the bribery scheme.

As a result, the DOJ agreed to a 25% reduction from the bottom of the US sentencing guidelines. Due to GOL’s financial situation, however, GOL accepted a reduced penalty of $17 million.

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