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LAN Airlines to pay more than $22 million after allegations of improper payments

By Mark Iandolo | Jul 27, 2016

MIAMI (Legal Newsline) — LAN Airlines, a South American-based company, will pay more than $22 million after allegations of improper payments it authorized during a labor dispute, The Securities and Exchange Commission (SEC) announced.

While negotiating labor agreements with the unions, LAN was allegedly contacted by a consultant from Argentina who offered to negotiate on the company’s behalf; he claimed he would make payments, once compensated, to third parties who had influence over the unions. LAN’s CEO purportedly agreed and paid $1.15 million to the consultant in a sham contract for a study of existing air routes, even though he knew no such study would take place and that some of the money would likely pass to union officials.

“LAN used a sham consulting agreement to make its financial reporting appear as though the company was funding a study rather than steering money to settle labor disputes,” Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, said. “This settlement along with our prior case against the CEO shows that public companies and their executives must be truthful and forthcoming about its overseas consulting agreements or otherwise pay the consequences.”

Denise Hansberry and Tracy L. Price of the FCPA Unit handled the case. Assisting in the matter were Justice Department’s Fraud Section and the Federal Bureau of Investigation as well as the Cayman Islands Monetary Authority.   

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