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Enforcement Action Dataset

 

Initiation Date:    07/25/2016  Information

Prosecuting Agency:    U.S. Department of Justice

Type of Action:    DOJ Criminal Proceeding

Docket or Case Number:    16-cr-60195

Court:    S.D. Florida

Name of Prosecuting Attorneys:   

  • Andrew Weissman, Chief, Fraud Section, Criminal Division
  • Jason Linder, Senior Trial Attorney, Fraud Section, Criminal Division

US Assisting Agencies:   

  • U.S. Securities and Exchange Commission

Foreign Enforcement Action/Investigation:    Unknown

Foreign Assistance:    Unknown

Origin of the Proceeding:    Press reports

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

LATAM Airlines Group S.A. ("LATAM'') was the successor to LAN Airlines S.A. ("LAN''). LAN was, until 2012, a Chilean airline company that provided passenger and cargo transportation throughout Latin America, as well as to the United States, Europe, and Australia. Until 2012, LAN's shares were registered with the SEC and traded on the New York Stock Exchange ("NYSE"). ln June 2012, LAN merged with Brazilian ariline TAM S.A., and the merged company became LATAM, incorporated and headquartered in Chile. After the merger, LATAM's shares were registered with the SEC and traded on the NYSE.

In September and October of 2006, executives at LAN, including Ignacio Cueto Plaza, executed a fictitious $1.15 million consulting agreement with an advisor to the Secretary of Argentina’s Ministry of Transportation. Although the agreement purportedly required the consultant to undertake a study of Argentine airline routes, the consultant never provided any such services. Instead, the consultant funneled the money he received pursuant to the contract to Argentine labor union officials in exchange for the union agreeing to accept lower wages and to not enforce what would have been a costly labor rule. In total, LAN profited by more than $6.7 million as a result of the bribes paid to the union officials.

On July 25, 2016, the DOJ filed a two count Information in the Southern District of Florida against LATAM alleging violations of the books & records and internal controls provisions of the FCPA. On the same date, the DOJ entered into a Deferred Prosecution Agreement with LATAM. Under the terms of the agreement, LATAM agreed to pay a criminal penalty of $12.75 million, to enhance its anti-corruption compliance policies and procedures, and hire an independent monitor for a term of 27 months to review and report on the company's anti-corruption compliance. The fine was 25% above the low end of the sentencing guidelines range, and in agreeing to the DPA, the DOJ specifically cited LATAM's full coorperation. However, the DOJ also noted that the company received a fine within the guidelines range because it had not voluntarily disclosed the misconduct and had not implemented sufficient remedial measures prior to the enforcement action, including the disciplining of any of the employees involved in the misconduct.

In a related proceeding, the SEC issued a cease and desist order against LAN which proscribed violating the books & records provisions of the FCPA, mandated payment of disgorgement and prejudgment interest of $9,437,788, and required the retention of an independent corporate compliance monitor.

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