The US Securities and Exchange Commission (SEC) has charged Brazil’s second largest domestic airline, GOL Linhas Aéreas Inteligentes, for violating the Foreign Corrupt Practices Act (FCPA). The São Paulo-based company, also known as Gol Intelligent Airlines, agreed to pay $70 million to settle the SEC charges.
According to the SEC’s order, GOL bribed prominent Brazilian government officials in exchange for certain favourable payroll tax and aviation fuel tax reductions. The scheme took place against a backdrop of insufficient internal accounting controls, and the bribes were characterized as legitimate business expenses in Gol’s recordkeeping, according to the SEC.
"This case highlights the need for internal accounting controls that are effective for transactions initiated at all levels of an organization," said Charles Cain, the SEC’s FCPA Unit Chief. "Here, Gol’s internal accounting controls were particularly ineffective for transactions initiated by those at its highest levels."
GOL consented to a cease-and-desist order finding that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA.
GOL also agreed to enter into a deferred prosecution agreement with the US Department of Justice and to pay more than $87 million to settle criminal charges.
Due to GOL’s demonstrated financial condition and inability to pay the fines in full, the SEC and the DOJ waived payment of all but $24.5 million and $17 million of GOL’s payment obligations, respectively. GOL will pay approximately $3.4 million in additional penalties or restitution to Brazilian authorities.
In determining to accept the offer, the SEC said that it considered GOL’s cooperation and remedial acts, which included disciplining the GOL director who orchestrated the scheme and enhancing internal accounting controls and anti-corruption policies and procedures.