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In the Matter of LAN Airlines S.A.

 
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LAN Airlines S.A.
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SEC Civil
:
July 25, 2016
:
In the Matter of LAN Airlines S.A.
:
In the Matter of LAN Airlines Admin. Pro. File. No. 3-17357 (2016)
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The SEC did not allege that LAN 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.
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Transportation-Airline
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Argentina
:
2006; 2007
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Unnamed officials from Argentine labor unions.
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LAN Airlines S.A. was an airline company headquartered in Santiago, Chile, that provided passenger and cargo airline services throughout Latin America. LAN merged with TAM, S.A. in 2012 and became LATAM Airlines Group. Throughout the relevant period, LAN’s common stock was registered in the United States pursuant to the Exchange Act and was traded on the New York Stock Exchange.

According to the SEC’s cease-and-desist order, in 2006 and 2007, LAN’s CEO, Ignacio Cueto Plaza, approved payments totaling $1.15 million to a third-party consultant with the understanding that some portion of the payments would be passed to Argentine union officials to stem potential labor unrest that threatened the company’s efforts to expand into the Argentine airline market. According to the SEC, Cueto and LAN were aware that the services described in the agreement would never be provided. Furthermore, the SEC claims that Cueto and other LAN officers were able to circumvent the company’s internal controls to cause the payments to be improperly recorded on LAN’s books and records.

On July 25, 2016, the SEC announced that the Commission and LAN had settled an FCPA enforcement action against the company for violations of the FCPA’s books-and-records and internal controls provisions. According to a cease-and-desist order, LAN agreed to pay a total sanction of $9,437,788. This was in addition to a $12,750,000 criminal penalty that LATAM Airlines agreed to pay as part of a separate settlement with the DOJ. Cueto also settled an FCPA enforcement action against him by the SEC earlier in 2016.
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Books and records (Issuer), Internal controls (Issuer)
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Cease and Desist, Civil penalty, Disgorgement, Prejudgment Interest
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LAN agreed to pay disgorgement of $6,743,923 and prejudgment interest of $2,693,856.
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9,437,788
:
0
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Issuer
:
Foreign
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Chile
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Other Business Advantage
:
Not stated.
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Cash
:
Customs Broker or Agent/Consultant
:
Not stated.
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Argentina
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United States
:
No
:
No