A&O Shearman FCPA Digest | In the Matter of GoL Linhas Aéreas Inteligentes S.A (2022)

Source Documents

Nature of Business
GoL Linhas Aéreas Inteligentes S.A. (“GoL”) is a Brazilian airline based in Sao Paulo, Brazil. GoL’s shares are listed on the NYSE, and it files periodic reports with the SEC pursuant to the Exchange Act.

GoL Linhas Aéreas S.A. is GoL’s wholly-owned air transportation operating subsidiary.

Influence to be Obtained
According to the SEC’s Cease-and-Desist Order, GoL allegedly paid, directly or through a GoL director and its operating subsidiary GoL Linhas Aéreas S.A., the approximate equivalent of $5.4 million in bribes to Brazilian legislators and politicians to lower certain taxes, resulting in financial benefits to GoL and other companies the GoL director owned. The SEC alleged that GoL paid the bribes directly to the legislators and politicians or to their close associates or associated companies, and improperly characterized those payments as legitimate advertising expenses or as payments for other services that were never rendered. In return, the Brazilian legislators and politicians allegedly used their influence to include the aviation industry under a new alternative payroll tax law in which airlines would be taxed at a 1% to 3% rate on revenue rather than the standard 20% payroll tax. As a result, GoL saved the approximate equivalent of $39.7 million under the new tax structure.

The SEC also alleged that GoL bribed politicians to use their influence to lower the aviation fuel tax in the Federal District (Brasilia) from 25% to 12%. GoL allegedly then added more flights to and from Brasilia and saved the approximate equivalent of $12.24 million from lower aviation fuel taxes and increased reliance on Brasilia as a refueling hub.

Enforcement
On September 15, 2022, the SEC announced that it had resolved an FCPA enforcement action against GoL in which GoL would pay $24.5 million to settle the SEC charges, with a $1.7 million offset for payment to the Brazilian government. The SEC initially required GoL to pay disgorgement of $51.94 million and prejudgment interest of $18.06 million, for a total of $70 million, but agreed to waive all except for $24.5 million due to GoL’s demonstrated financial condition and inability to pay the initial amount in full.

The SEC acknowledged GoL’s cooperation, including “voluntarily summarizing and providing facts developed during its own internal investigation, translating certain documents, and making its current management available to the Commission staff, including those who needed to travel to the United States.” The SEC also recognized GoL’s remediation including “conducting a comprehensive risk assessment; reevaluating and re-designing its anti-corruption compliance program; creating a risk and compliance department and hiring a new chief compliance officer to lead this new department; and terminating its relationships with third parties involved in the misconduct.”

In a related matter, GoL entered into a three-year deferred prosecution agreement with the Department of Justice and agreed to pay a criminal fine of $87 million, which was reduced to $17 million due to GoL’s financial condition.

Citation
In the Matter of GoL Linhas Aéreas Inteligentes S.A, Admin Proc. File No. 3-21094 (September 15, 2022)