Brazilian airline settles FCPA violations for $70 million tax bribes

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 US Department of Justice (DOJ) also pursued criminal charges against GOL, but due to the airline’s inability to pay, the SEC and DOJ agreed to accept reduced fines.

The SEC order explained that the Sao 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 cuts unfolded amid “poor internal accounting controls and Gol’s books and records called the bribes wine from legitimate business expenses,” the agency commented.

The SEC and DOJ investigation found that GOL violated anti-corruption, books and records, and internal accounting controls of the FCPA, a subsidiary paying bribes the equivalent of approximately $1.14 million dollars to a Brazilian official from October 2012 to November 2013, disguising the payments as publicity expenses.

In settling the charges, the GOL agreed to a cease and desist order finding that it violated the FCPA. The airline also reached a deferred prosecution agreement with the DOJ and agreed to pay more than $87 million to settle the criminal charges.

However, due to GOL’s compromised financial condition, the SEC’s fine of $70 million was reduced to $24.5 million and the DOJ’s to $17 million. The press release also mentions that GOL will pay $3.4 million in additional fines or restitution to Brazilian authorities.