Bribery Probe Into the Dominican Republic’s 8 Super Tucanos
Nov 2/13: Bribery? Embraer is under investigation in the USA for allegedly paying $3.4 million in bribes to Dominican Col. Carlos Piccini (ret.), who was armed forces’ director of special projects when the Super Tucano deal was signed. They’re also under investigation for a $900+ million deal that has sold 22 E-190 passenger jets to Argentina’s state-owned Aerolineas Argentinas.
Embraer has been private since 1994, but it still has connections to Brazil’s government via a nominal “golden share” with veto power in certain circumstances. So, why would the USA have any jurisdiction over either of these deals? Because Embraer is listed on the NYSE, where it trades as “ERJ”. The USA is also asserting that some of the funds supposedly passed through the US financial system, based on bank records and emails that are reportedly in the DoJ and SEC’s possession. How they got hold of that information has not been revealed.
Embraer has disclosed investigations by the U.S. Department of Justice and the Securities and Exchange Commission since 2011 regarding “sales of aircraft abroad,” but these recent reports adds key specifics. Embraer reportedly hired Baker & McKenzie LLP in 2010 to conduct an internal inquiry after receiving notice from the US SEC, and Brazil’s Federal Public Ministry is also undertaking an investigation after being approached by the USA in March 2012. While it’s also a crime under Brazilian law for companies to pay bribes, that August 2013 law isn’t retroactive. That may give Embraer a key out in Brazil, but the USA can levy significant fines, and has used that power in the past against firms like BAE who won major Saudi defense deals. Sources: Wall St. Journal, “Plane Maker Embraer Faces Bribery Inquiries” | Reuters via Yahoo!, “Embraer investigated for bribery in Argentine, Dominican deals”.
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Brazil’s EMB-314/ A-29 Super Tucano continues to be the aircraft of choice for Latin American air forces who want to conduct drug interdiction and counterinsurgency missions. Their modern trainer/ counterinsurgency concept is slowly replacing the brilliant but under-appreciated OA-37 Dragonfly in the region. The Dominican Republic became the latest example of that trend in 2009, but now American officials are pushing bribery allegations against Brazil’s Embraer.
End of the Season for Dragonflies
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While the US Air Force was quick to throw their Dragonfly fleet away after Vietnam, Latin American countries have made strenuous efforts to keep their fleets in service. Unfortunately, the Vietnam-era jets aren’t cost-effective to modernize, and are simply running out of parts and safe flying hours.
The large, ruggedly-built EMB-314/ A-29 Super Tucano trainers and light attack aircraft can operate from unimproved airfields. They come with a pair of M3P .50 caliber machine guns in the wings, plus the ability to mount surveillance and targeting pods like RAFAEL and Northrop-Grumman’s popular LITENING, use precision ground attack weapons, and even fire Mectron MAA-1 Piranha short range air-to-air missiles. Those kinds of air policing and precision strike capabilities are a big step up from standard COIN loads like conventional bombs, rocket pods, and gun pods.
Contracts & Key Events
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Nov 2/13: Bribery? Embraer is under investigation in the USA for allegedly paying $3.4 million in bribes to Dominican Col. Carlos Piccini (ret.), who was armed forces’ director of special projects when the Super Tucano deal was signed. They’re also under investigation for a $900+ million deal that has sold 22 E-190 passenger jets to Argentina’s state-owned Aerolineas Argentinas.
Embraer has been private since 1994, but it still has connections to Brazil’s government via a nominal “golden share” with veto power in certain circumstances. So, why would the USA have any jurisdiction over either of these deals? Because Embraer is listed on the NYSE, where it trades as “ERJ”. The USA is also asserting that some of the funds supposedly passed through the US financial system, based on bank records and emails that are reportedly in the DoJ and SEC’s possession. How they got hold of that information has not been revealed.
Embraer has disclosed investigations by the U.S. Department of Justice and the Securities and Exchange Commission since 2011 regarding “sales of aircraft abroad,” but these recent reports adds key specifics. Embraer reportedly hired Baker & McKenzie LLP in 2010 to conduct an internal inquiry after receiving notice from the US SEC, and Brazil’s Federal Public Ministry is also undertaking an investigation after being approached by the USA in March 2012. While it’s also a crime under Brazilian law for companies to pay bribes, that August 2013 law isn’t retroactive. That may give Embraer a key out in Brazil, but the USA can levy significant fines, and has used that power in the past against firms like BAE who won major Saudi defense deals. Sources: Wall St. Journal, “Plane Maker Embraer Faces Bribery Inquiries” | Reuters via Yahoo!, “Embraer investigated for bribery in Argentine, Dominican deals”.
Oct 29/10:The last of the Dominican Republic’s 8 Super Tucanos are accepted into inventory. The Dominican Republic air force notes that 10 pilots and 21 copilots already have been trained to operate the turboprop, with another 8 pilots in training as of October 2010. Aviation Week.
All delivered
Jan 5/10: The first 2 Super Tucanos were delivered to the Dominican Republic in late December, 2009.
Jan 9/09: Embraer. confirms the sale of 8 Super Tucano aircraft to the Dominican Republic, which shares an island in the Caribbean with Haiti. Embraer adds that the aircraft will be used for “internal security and border patrol missions, within an operations theater focusing on fighting the drug traffic.”
The Fuerza Aerea Dominicana stopped flying its A-37s in 2001, and the Super Tucanos will restock its combat squadron at San Isidro. The contract was finalized at the end of 2008, and subsequent reports place it at $92 million.
Mexican freelance journalist Inigo Guevara is a member of the SIPRI Network, and has just finished a book covering Latin American fighters. He informs DID that the figure mentioned in the Dominican Republic’s press is US$ 93 million, financed by a a loan from Brazil’s National development bank that required 18 months of Congressional debate to approve.
To date, 63 Super Tucanos have been delivered to Brazil (of 99 ordered) and all 25 to Colombia. Chile recently ordered 12, and Venezuela wanted 36 but the USA intervened to bock the sale. Guevara adds that other Super Tucano exports within the region are pending: a 24 plane deal for Ecuador worth up to $280 million, and Guatemala’s intent to buy 6 aircraft (which took until April 2013).
8 Super Tucanos
