Latam to Pay $12.7 Million for Bribery-Linked Record Crimes

  • Predecessor airline paid union to accept lower wages: U.S.
  • Carrier made $6.7 million from bribery, prosecutors say

Latam Airlines Group SA agreed to pay $12.7 million to resolve a U.S. criminal probe into allegations the Chilean carrier’s predecessor paid bribes to union officials in Argentina.

The predecessor, LAN Airlines SA, made a phony $1.15 million consulting agreement with an adviser to an official of Argentina’s transportation ministry in 2006, federal prosecutors said, adding that the money was funneled to labor union officials in exchange for an agreement to accept lower wages.

The airline profited by more than $6.7 million as a result of the bribes paid to the union officials, according to the government.

Santiago-based Latam has entered into a three-year deferred-prosecution agreement with the government, resolving a Foreign Corrupt Practices Act case against it filed Monday in Fort Lauderdale, Florida.

The company is charged with violating the “false books” and accounting provisions of the FCPA, which makes it a crime for companies doing business in the U.S. to bribe foreign officials. Executives “knowingly and willfully failed to implement internal accounting controls to address the known weaknesses,” prosecutors said in court papers.

Facts Admitted

Under the agreement, the company admitted the facts set forth in an accompanying accusatory information. According to that document, “LAN negotiated and executed a fictitious $1.15 million consulting agreement” with a consultant, “in order to funnel bribes to labor union officials.”

The government will dismiss the charges in three years if Latam keeps its part of the bargain.

“The company collaborated with authorities in all stages of the process” and has improved its compliance controls since the payments took place, the airline said in a statement.

The Justice Department said Latam cooperated with the government “after the press in Argentina uncovered and reported the conduct.”

Latam separately agreed to disgorge $9.4 million to settle a related matter before the U.S. Securities and Exchange Commission, according to a statement issued by that agency.

The criminal case is U.S. v. Latam Airlines Group SA, 16-cr-60195, U.S. District Court, Southern District of Florida (Fort Lauderdale).

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