A Stay-Out-of-Jail-Free Card for the Business Aviation Industry

Doing business in this industry generally requires extensive interaction with government agencies or, most often, individuals who may be considered “foreign officials” under the US Government’s broad interpretation of such term for FCPA purposes. Thus, opportunities for FCPA-related business risk abound, especially where there is a deep-seated cultural tradition of gift giving and entertainment as an acceptable, if not required, means of conducting business.

The FCPA and Private Aviation: A Love Story

The FCPA turns 40 this year, and not many realize that one of the very first enforcement actions under the FCPA involved private jets – specifically, sales of Gulfstream II aircraft secured through corrupt payments by a third-party agent of a leading aircraft manufacturer. Private aviation is an industry that U.S. regulators and enforcement agencies have brought under their proverbial magnifying glass from time to time, knowing well what they would likely find. Indeed, over just the past few years, the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) have opened at least eight aviation-related FCPA investigations around the globe resulting in seven enforcement actions and prosecutions. And the consequences have been dire: about four senior executives and sales managers associated with various aviation businesses have been charged, and over $654 million in fines and penalties have been paid over to the US. Government as a result of civil settlements, plea agreements and other criminal resolutions. Thus, to thrive (and survive) in an increasingly turbulent global aviation industry, it is paramount for businesses and company executives alike to understand how to prevent FCPA violations and manage related risks.

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