A Brazil-based airline was ordered to pay over $100 million in fines and restitution to settle parallel SEC and DOJ enforcement actions for perpetrating a bribery scheme to gain payroll tax and aviation fuel tax reductions in violation of the Foreign Corrupt Practices Act ("FCPA"). The airline is listed on the NYSE and registered with the SEC under the Securities Exchange Act.

The SEC found that the airline's director paid politicians, including a high-ranking legislator, to pass legislation that granted the airline a tax cut. The SEC said that the company later engaged in another bribery scheme to lower a local aviation fuel tax and then categorized the bribes as legitimate items in its recordkeeping books including (i) reimbursement for online advertising expenses, (ii) fees for services (that were never rendered) and (iii) other "legitimate" business expenses. The SEC also found that the airline's director communicated with government officials and legislators through end-to-end encrypted messaging services exclusively located within the United States.

Additionally, the company failed to maintain adequate internal controls regarding its accounting and recordkeeping, which directly resulted in a payment approval process with little to no oversight and contrary to corporate policy against making improper payments to government officials.

As a result, the SEC determined that the airline violated Exchange Act Section 13(b)(2)(A)-(B) ("Periodical and other reports") and Section 30A ("Prohibited foreign trade practices by issuers"). To settle the charges, the airline agreed to (i) cease and desist and (ii) pay a civil monetary penalty totaling $70 million. Because of the airline's financial condition, the SEC agreed to waive all but $24.5 million of the fine, which will be paid over two years.

In the parallel criminal proceeding, filed in the District of Maryland, the DOJ charged the airline with one count of violating the anti-bribery provisions of the FCPA for willingly conspiring to pay bribes to Brazilian government officials to gain beneficial tax treatment. The DOJ found that, between 2012 and 2013, the airline paid approximately $3.8 million in bribes to foreign officials in Brazil, then entered into sham contracts with, and made payments to, various entities connected to the relevant Brazilian officials to conceal the scheme. As a result, the airline maintained records that falsely listed the corrupt payments as legitimate expenses.

To settle the charges, the airline was ordered to pay $87 million in criminal penalties, of which it will receive a credit of up to $1,700,000 for a $3,400,000 fine previously paid to Brazilian authorities. Additionally, since the airline represented that it is now unable to fulfill the complete obligation of the fine, the airline was allowed a reduction in the penalty amount and to pay over time.