US Prosecution Ties to South African Corruption at South African Airways
Recent findings from South Africa’s Zondo Judicial Commission of Inquiry have revealed significant corruption involving South African Airways (SAA), its maintenance subsidiary South African Airways Technical (SAAT), and ground handler Swissport from 2016 to 2020. These findings have led to notable international repercussions, including the first foreign prosecution related to these bribery schemes.
Julian Aires, the president of the US-based JM International, has pleaded guilty to charges under the US Foreign Corrupt Practices Act (FCPA). The charges were brought by the United States Department of Justice (DOJ), which accused Aires of conspiring to bribe South African officials to secure lucrative contracts for aircraft component services. This case was unsealed in the District Court of Columbia on July 15, following Aires’s plea agreement.
Documents reveal that Aires and his co-conspirators engaged in a sophisticated bribery operation from January 2016 to January 2020. They aimed to secure a five-year contract for JM Aviation South Africa—a joint venture between JM International and Illinois-based AAR—to provide SAAT with components and repair services. Bribery payments, disguised as consulting fees and made through cash and wire transfers, totaled approximately USD 5.3 million in various “commissions, success fees, and advance payments.”
The Zondo Commission’s extensive report also highlighted the unlawful nature of a USD 125 million contract between JM Aviation/JM International, AAR, and SAAT, facilitated through bribes to influential figures at SAAT. These bribes ensured that the contract appeared legitimate and unrelated to the decision-makers at SAAT during that period.
In another linked case, Aires and his associates were involved in paying USD 2.7 million in bribes related to a ground-handling contract between SAA and Swissport in 2016. This corruption facilitated a service-level agreement between Swissport and JM Aviation, leading to substantial illegal payments to South African officials.
The ongoing US legal proceedings against Aires are expected to open the door for more FCPA investigations. AAR’s involvement in these corrupt practices has also come under scrutiny, with self-reported potential FCPA violations in Nepal and South Africa as part of their internal compliance measures.
The aftermath of the Zondo Commission’s findings and the subsequent US prosecution underscore the international dimensions of corporate and governmental corruption, highlighting the global efforts required to address these pervasive issues.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com