A press release issued Thursday by the Securities and Exchange Commission (SEC) announced the resolution of Foreign Corrupt Practices Act (FCPA) charges against Brazilian airline GOL Linhas Aéreas Inteligentes (GOL). Reportedly, the U.S. Department of Justice (DOJ) also pursued criminal charges against GOL, but due to the airline’s inability to pay, both the SEC and the DOJ agreed to accept reduced fines.
The SEC’s order explained that the São Paulo, Brazil-based airline is the country’s second largest domestic carrier and its shares trade on the New York Stock Exchange. The airline’s scheme to bribe Brazilian officials in exchange for payroll tax and fuel tax reductions came amidst a backdrop of “insufficient internal accounting controls and Gol’s books and records characterized the bribes as legitimate business expenses,” the agency commented.
The SEC and DOJ’s investigation found that GOL violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA, with a subsidiary paying bribes the approximate equivalent of $1.14 million to a Brazilian official from October 2012 through November 2013, disguising the payments as advertising expenses.
In settling the accusations, GOL agreed to a cease-and-desist order finding that it violated the FCPA. The airline also entered into a deferred prosecution agreement with the DOJ and agreed to pay more than $87 million to settle criminal charges.
However, owing to GOL’s compromised financial position, the $70 million fine levied by the SEC was reduced to $24.5 million and the DOJ’s to $17 million. The press release also mentioned that GOL will pay $3.4 million in additional penalties or restitution to Brazilian authorities.