In the Matter of LAN Airlines S.A. (2016)
In the Matter of Ignacio Cueto Plaza (2016)
Case Details
- Case Name
- In the Matter of LAN Airlines S.A. (2016)
In the Matter of Ignacio Cueto Plaza (2016)
- Countries
- Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, Venezuela
- Foreign Official
- Unnamed officials from Argentine labor unions.
- Date of Conduct
-
2006 to 2007
- Nature of Business
- LAN Airlines S.A. was an airline company headquartered in Santiago, Chile that provided passenger and cargo airline services throughout Latin America. LAN merged with TAM, S.A. in 2012 and became LATAM Airlines Group. Throughout the relevant period, LAN’s common stock was registered in the United States pursuant to the Exchange Act and was traded on the New York Stock Exchange. Ignacio Cueto Plaza, a Chilean citizen, has been the CEO of LAN Airlines S.A. since 2012. Prior to 2012, Cueto served on LAN’s Board of Directors and later became President and COO of the company in 2005.
- Influence to be Obtained
- According to the SEC’s cease-and-desist order, in 2006 and 2007, Cueto Plaza authorized payments totaling $1.15 million to a third-party consultant in Argentina with the understanding that some portion of the payments would be passed to Argentine union officials to stem potential labor unrest that threatened the company’s efforts to expand into the Argentine airline market. The SEC claims that the payments were made pursuant to an unsigned consulting agreement that purported to provide services that Cueto Plaza and LAN understood would never occur. To execute the scheme, Cueto Plaza and other LAN officers allegedly circumvented the company’s internal controls to cause the payments to be improperly recorded on LAN’s books and records.
- Enforcement
- On February 4, 2016, the SEC announced that it had resolved an FCPA enforcement action against Cueto Plaza. As stated in the SEC’s cease-and-desist order, Cueto Plaza was responsible for causing LAN to violate the FCPA’s books-and-records and internal controls provisions and was ordered to pay a civil penalty of $75,000.
Later, on July 25, 2016, the SEC also announced that it had resolved its FCPA enforcement action against LAN. According to the cease-and-desist order, LAN violated the FCPA’s books-and-records and internal controls provisions. As part of the order, LAN would be required to pay a total sanction of $9,437,788 and engage an independent compliance monitor for a two-year period. On the same day, the DOJ announced that it had entered into a deferred prosecution agreement with LATAM Airlines Group S.A. whereby LATAM Airlines would pay a criminal penalty of $12.75 million and would engage an independent compliance monitor for a period of 27 months.
- Amount of the Value
- Approximately $1.15 million.
- Amount of Business Related to Payment
- $6,743,932.
- Intermediary
- Local Consultant.
- Citizenship of Parent Entity
- Chile
- Total Sanction
- $ 9,512,788
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 22,262,788
Defendants
LAN Airlines S.A.
- Citation
- In the Matter of LAN Airlines S.A., Admin Proc. File No. 3-17357 (July 25, 2016);
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Chile
Ignacio Cueto Plaza
- Citation
- In the Matter of Ignacio Cueto Plaza, Admin. Proc. File No. 2317100 (Feb. 4, 2016).
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- Chile
