A New Parallel FCPA Investigation Involving Brazil Results In A More Than 41 USD Million Penalty – White Collar Crime, Anti-Corruption & Fraud

On September 15, Brazilian airline GOL Linhas Aéreas
Inteligentes S.A. (“GOL”) agreed to pay more than $41
million to resolve parallel bribery investigations by criminal and
civil authorities in the United States and Brazil. GOL’s
offenses were investigated in parallel by the U.S. Department of
Justice (“DOJ”) Fraud Section, the U.S. Securities and
Exchange Commission (“SEC”) FCPA Section, and Brazilian
authorities (the Controladoria-Geral da União and the
Brazilian Attorney General’s Office).

According to the deferred prosecution agreement (“DPA“) , GOL, through its director and
intermediary, corruptly offered and paid approximately 3.8 million
in bribes to Brazilian government officials with the goal of
getting two pieces of legislation passed by the National Congress
of Brazil and the Legislative Chamber of the Federal District of
Brasilia. These pieces of legislation involved certain payroll tax
and fuel tax reductions that would financially benefit GOL.
Furthermore, the company admittedly entered into fraudulent
contracts with third-party vendors to generate and conceal the
necessary funds. Finally, GOL also falsely recorded the sham
payments in GOL’s books.

Based on these facts, GOL entered into a three-year deferred
prosecution agreement (“DPA”) with the DOJ (see
Press Release) and a settlement with the SEC
(see Press Release), agreeing to pay the following
amounts:

• A reduced criminal penalty of 17 USD million pursuant to the
  DPA (with 1.7 USD million credit towards the payment to Brazilian
  authorities).




• A reduced penalty of 24.5 USD million to the SEC.




• A criminal penalty of 3.4 USD million to Brazilian
  authorities.

The DOJ penalty reflects a 25% reduction off the applicable
guidelines fine range, acknowledging the company’s full
cooperation and remedial measures already taken during the
investigation period (note that the initial penalty was over 87 USD
million). Further, given the financial condition of the company,
the DOJ agreed to reduce the penalty as per the DOJ’s inability
to pay guidance. The SEC also agreed to considerably reduce the
initial fine (70 USD million).

This is the third SEC enforcement action and fourth DOJ case
this year that relates to Brazilian entities. This case reinforces
the U.S. government trend to continue investigating
Brazilian-related bribery. In addition, this highlights the
benefits resulting from remedial action and full cooperation, while
calling for strong FCPA-related compliance programs focusing on
changing compliance culture.

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