Washington, D.C. — The U.S. Securities and Exchange Commission (SEC) announced today that Illinois-based AAR CORP., a leading global provider of aviation services and products, has agreed to pay approximately $30 million to settle charges related to two bribery schemes under the Foreign Corrupt Practices Act (FCPA). The charges stem from bribery schemes involving officials in Nepal and South Africa, which were orchestrated by Deepak Sharma, a former executive at one of AAR’s subsidiaries.
The SEC’s investigation revealed that from 2015 to 2018, Sharma, who was the President of International Supply Chain at AAR’s subsidiary, played a pivotal role in facilitating the payment of bribes to foreign officials in order to secure lucrative contracts for AAR. One of the contracts involved the sale of two Airbus A330 aircraft, valued at approximately $210 million, to Nepal Airlines, a government-owned carrier. The SEC found that AAR hired a third-party agent to funnel bribes to officials with control over the contract, ensuring its success.
The SEC’s order also found that Sharma was involved in a separate bribery scheme related to a contract between AAR and a subsidiary of government-owned South African Airways. In this case, AAR paid millions of dollars in bribes to South African and Nepalese officials to win the contract for aviation services.
SEC and DOJ Penalties
As part of the settlement, AAR has agreed to pay $29.2 million in disgorgement and prejudgment interest, which the SEC determined was necessary to resolve the charges related to violations of the FCPA’s anti-bribery, recordkeeping, and internal accounting controls provisions.
In a parallel action, the U.S. Department of Justice (DOJ) announced that AAR had entered into a non-prosecution agreement, under which the company agreed to pay an additional $26.36 million in criminal penalties.
Deepak Sharma, who was directly implicated in the bribery schemes, has consented to an SEC order, which finds that he violated the FCPA’s anti-bribery, recordkeeping, and internal accounting controls provisions. Sharma has agreed to pay $184,597 in disgorgement and prejudgment interest, with $130,835 of the amount already covered by a prior forfeiture order under a separate DOJ agreement.
Charles Cain, Chief of the SEC’s FCPA Unit, underscored the global scope of the bribery schemes, pointing out that the incidents took place in both Nepal and South Africa. “This matter serves as another reminder that companies must have robust compliance and accounting controls that are commensurate with the FCPA risks they face, including with respect to their work with third parties across their business operations,” Cain said. He further emphasized that a deficient control environment can create conditions ripe for misconduct to cross international borders.
The SEC’s investigation was conducted by Michelle I. Bougdanos, Jon B. Jordan, Shahriar Masud, and Sonali Singh, with supervision from David Frohlich and Thierry Olivier Desmet. The SEC also acknowledged assistance from the Hong Kong Securities and Futures Commission and the Financial Sector Conduct Authority of South Africa.
“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,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “Bribery schemes, whether based inside or outside the United States, harm consumers and companies that are trying to lawfully run their businesses. That is why this office, along with our law enforcement partners, will continue to diligently pursue any individual or company that seeks to profit through corrupt or illegal means.”
“AAR, through its bribery of government officials in Nepal and South Africa, violated U.S. law enacted to ensure that U.S. businesses do not engage in foreign corruption,” said Special Agent in Charge William S. Walker of the Homeland Security Investigations (HSI) New York Field Office. “Today’s outcome reflects HSI’s steadfast commitment to enforcing accountability within global commerce. HSI New York will continue to pursue all necessary measures to ensure that those who engage in corrupt practices, regardless of their location or position, are held fully accountable under the law.”
About AAR CORP.
AAR CORP. is a global provider of aviation services and products, offering solutions ranging from aircraft maintenance and repairs to parts supply and logistics services. With operations in over 20 countries, the company serves a wide range of clients, including commercial and government customers.
AAR is a provider of services catering to both the commercial aviation and government sectors across the globe. Established in 1955, the company boasts revenues nearing $1.8 billion and employs over 6,000 individuals in 20 different countries. AAR specializes in aviation services that can be utilized together or independently, enabling clients to enhance efficiency and cut costs while upholding exceptional standards of quality, service, and safety.
