Illinois-based aviation services company AAR CORP. has agreed to pay more than $55 million to settle investigations by the Justice Department and the Securities and Exchange Commission (SEC) regarding violations of the Foreign Corrupt Practices Act (FCPA). This resolution arises from AAR's admission of engaging in schemes to bribe government officials in Nepal and South Africa to secure business with state-owned airlines, according to information from the U.S. Attorney's Office.
The settlement includes an 18-month non-prosecution agreement (NPA) with the Department. The company admitted, confessing between the years 2015 and 2020, they conspired to pay bribes resulting in nearly $24 million in ill-gotten profits. As part of the NPA, AAR will pay a penalty of approximately $26.4 million and forfeit $18.6 million. The company will also disgorge $29.2 million in profits and interest to the SEC.
U.S. Attorney Graves emphasized that "Companies competing on a fair and level playing field is a core value that we expect any U.S. company or anyone doing business in the United States to embrace," according to the Justice Department's statement. He went on to assert that bribery schemes damage the rights of consumers and law-abiding businesses, compelling a continuous pursuit to prosecute those who seek illicit profit.
Special Agent in Charge William S. Walker of the Homeland Security Investigations New York Field Office detailed that AAR violated U.S. law by bribing officials in the pertinent countries. He vowed continued enforcement of accountability within global commerce. AAR's compliance with reporting and enhancing its internal protocols was considered in the resolution agreement, reflecting their effort to rectify the misconduct, despite several English-language articles in Nepal and South Africa had already raised suspicions regarding the company's dealings in recent years.
In the wake of these occurrences, AAR has implemented several remedial measures which include conducting a comprehensive review of all high-risk third-party representatives, enhancing protocols for third-party engagements, and strengthening its compliance program. Among other steps, the company has also taken employment actions and invested in its compliance resources. The company's cooperation with the Department's investigation, including its self-reporting and the provision of extensive forensic analysis and documentation, afforded them a 45% reduction in criminal penalties.
The resolution underscores the Justice Department's intent to hold corporations accountable for engaging in corruption abroad. AAR's case also brings to light the involvement of individuals with former AAR subsidiary executive Deepak Sharma and third-party agent Julian Aires already pleading guilty for their roles in the corruption schemes. Homeland Security Investigations New York continues to investigate the case.
