Embraer investigated for bribery in Argentine, Dominican deals

Sat Nov 2, 2013 6:39pm EDT
 
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By Brad Haynes and Aruna Viswanatha

SAO PAULO/WASHINGTON (Reuters) - U.S. and Brazilian authorities are investigating whether Embraer SA (EMBR3.SA: Quote) bribed officials in Argentina and the Dominican Republic to secure deals for commercial and defense aircraft, according to legal documents reviewed by Reuters.

The investigations involve the sale of 20 passenger jets to an Argentine state airline, worth about $900 million at Embraer list prices, and a $92 million deal with the Dominican armed forces for eight Super Tucano light attack planes, according to documents prepared by prosecutors.

The world's third-largest commercial plane maker disclosed two years ago that it had been under investigation by the U.S. Department of Justice and the Securities and Exchange Commission since 2010 regarding sales of aircraft abroad.

The allegations cast a harsh light on one of Brazil's biggest exporters and a cornerstone of its growing defense industry, which is looking to build credibility with major powers after years of dealing arms in emerging markets.

Embraer's defense division has partnered with Boeing Co (BA.N: Quote) to sell an upcoming military cargo jet, its biggest plane ever, against Lockheed Martin Corp's (LMT.N: Quote) Hercules airlifter in the United States and Britain.

In documents reviewed by Reuters, prosecutors cited evidence that Embraer executives approved a $3.4 million bribe to a Dominican official with influence in military procurement. Details of the Dominican Republic case were first reported by the Wall Street Journal on Saturday.

Embraer is cooperating fully with authorities, the company said in a statement, but it declined to comment on details of allegations because of the confidentiality of the investigation.

"The company requires that all its employees have a conduct of strict compliance with laws and regulations," said a spokesman in an emailed statement on Saturday.   Continued...