$206 million settlement for Embraer, company admits faulty transactions

Brazilian aerospace conglomerate Embraer on Monday announced reaching a settlement with the US and Brazilian authorities in the ongoing corruption investigation against it.

The terms of settlement include payment of $206 million to the authorities, and an external and independent monitorship for up to three years, to ensure full compliance with the settlement terms, according to a statement from Embraer.

An internal enquiry done by Embraer determined that the company is "responsible for misdeeds in four transactions between 2007 and 2011 in Saudi Arabia, India, Mozambique and the Dominican Republic", it said.

The transactions involved the sale of 16 aircraft, it added.

"The company has also agreed to payments in an aggregate amount of close to $206 million to the US and Brazilian authorities. The settlement further provides that as long as the terms of the agreements are fully honoured, no charges will be brought against the company," the statement said.

It added that the inquiry began in 2010 when Embraer was questioned by American authorities regarding potential non-conformities related to certain commercial transactions abroad.

"The company then undertook a wide internal investigation, led independently by external law firms.

"From the beginning, Embraer took the matter seriously and fully cooperated with the investigation. As events unfolded, the company voluntarily expanded its scope and shared the results with the appropriate authorities," the company said.

It added that as part of its commitment to disclose material information to investors, the company has reported the progress of the investigations to the financial markets and to the regulatory agencies in Brazil and the United States.

"The company recently concluded its internal investigation after six years of intensive effort. Hundreds of thousands of documents were analysed and more than 100 interviews with employees and third parties were conducted," it said.

The statement added that the company "acknowledges responsibility for the conduct of its employees and agents according to the facts ascertained in the investigation. Embraer deeply regrets this conduct.

"The company has learned from this experience and will be stronger as it moves forward and continues its nearly 50 years of successful existence in which it has delivered more than 8,000 aircraft in over 90 countries."

The Brazilian Federal Prosecution Service has been conducting its own investigations in parallel and is filing lawsuits against certain individuals. Embraer said it is not party to these lawsuits.

In India, CBI is probing the deal for Embraer aircarft.

In 2008, Embraer sold three EMB 145 AEW&C (Airborne Early Warning & Control) aircraft to the government of India. The deal was worth $208 million.

The Defence Research & Development Organisation (DRDO) had also sought explanation from Embraer over alleged kickback payment in a deal for aircraft, injured during the UPA regime.

The issue was brought to the fore after a report in a Brazilian newspaper that said investigations have been opened by the government of the United States to establish whether Embraer paid bribes in order to obtain contracts abroad.

According to the report, the company has been under investigation by the United States Justice Department since 2010 when a contract with the Dominican Republic raised the Americans' suspicions. Since then, the investigation has widened to examine business dealings with eight more countries, including India and Saudi Arabia.