AAR Corp Resolves $55M DoJ Bribery Investigation
AAR Corp, a US-listed aviation services company, has agreed to pay $55.6 million to settle allegations of Foreign Corrupt Practices Act (FCPA) violations in Nepal and South Africa during 2016-17. The settlement, disclosed in a December 19 Securities and Exchange Commission (SEC) filing, resolves investigations by both the SEC and the Department of Justice (DOJ).
The company entered a non-prosecution agreement with the DOJ and received a cease-and-desist order from the SEC. According to the filing, the violations were primarily attributed to a former subsidiary employee and third-party agents. The settlement amount includes penalties, forfeiture, and pre-judgment interest. AAR plans to fund the payment through cash reserves and its revolving credit facility.
The investigation revealed that a former senior AAR manager facilitated bribes to secure contracts. In Nepal, Deepak Sharma, acting as an agent for AAR, bribed officials to win a $177 million contract for two Airbus A330-200s with Nepal Airlines Corporation. Sharma has admitted guilt and will testify in related trials.
In South Africa, a third-party agent bribed officials to secure an aircraft component support contract with South African Airways Technical, generating $24 million in profits for AAR. Julian Aires, another agent involved, has also pleaded guilty.
AAR self-reported these violations in 2019 and has since enhanced its global compliance program. Chairman and CEO John M. Holmes expressed satisfaction with the resolution and emphasized the company’s commitment to ethical practices and cooperation with authorities.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com