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U.S. v. LATAM Airlines Group S.A.

 
:
LATAM Airlines Group S.A.
:
DOJ Criminal
:
July 25, 2016
:
U.S. v. LATAM Airlines Group S.A.
:
U.S. v. LATAM Airlines Group S.A., No. 16-60195 (S.D. Fla. 2016)
:
The DOJ did not allege that LATAM violated the FCPA’s anti-bribery provisions possibly because it did not believe it could establish that the Argentine union officials who allegedly received illicit payments were “foreign officials” according to the language of the FCPA.
:
Transportation-Airline
:
Argentina
:
2006; 2007
:
Unnamed officials from Argentine labor unions.
:
LAN Airlines S.A., now LATAM Airlines S.A., is an airline company based in Santiago, Chile. LAN provided passenger and cargo transportation services throughout South and Central America as well as the United States, Europe, and Australia. At the time of the alleged FCPA violations, LAN maintained a class of securities listed stock on the New York Stock Exchange.

According to the DOJ’s deferred prosecution agreement, LAN negotiated and executed a “fictitious consulting agreement” in 2006 worth $1,150,000 to allegedly funnel bribes to Argentine labor union officials and stem potential labor unrest that threatened the company’s expansion into the Argentine airline market. According to the DPA, LAN executives knew at the time they approved the consulting agreement that the services described would never be provided and the company failed to perform any meaningful due diligence into the consultant. Furthermore, the DOJ claims that upon receipt of invoices for the consulting agreement, LAN approved payment and intentionally mis-recorded the payments on the company’s books and records.

On July 25, 2015, the DOJ announced that LATAM, as successor-in-interest to LAN, settled the charges against the company for violations of the FCPA’s books-and-records and internal controls provisions through a deferred prosecution agreement. According to the agreement, LATAM would pay a criminal penalty of $12.75 million. Pursuant to a separate enforcement action by the SEC, LAN Airlines agreed to pay an additional civil sanction of $9,437,788. The SEC also separately charted LAN Airlines’s CEO, Ignacio Cueto Plaza, with violations of the FCPA.
:
Books and records (Issuer), Internal controls (Issuer)
:
Compliance Monitor, Deferred-prosecution Agreement, Fine
:
$12,750,000 criminal penalty
:
12,750,000
:
0
:
Issuer
:
Foreign
:
Chile
:
Other Business Advantage
:
Not stated.
:
Cash
:
Customs Broker or Agent/Consultant
:
Not stated.
:
Chile
:
United States
:
No
:
No