BRAZIL INVESTIGATING SALE OF 20 EMBRAER E-190 TO
AEROLÍNEAS ARGENTINAS, FEARING SURCHARGES
Background Information: See
CRIME AND CORRUPTION ARE TWO OF THE
WORLD'S LARGEST MULTINATIONAL INDUSTRIES at:
and
ARGENTINA, BARELY 30 YEARS OF
DEMOCRACY, A YOUNG NATION TRYING TO FIND IT’S BEARING at:
ARGENTINA HAS NO LIABLE POLITICAL
OPPOSITION, OTHER THAN SELF SEEKING INDIVIDUALS FROM WITHIN THE PERONIST
MOVEMENT at:
IF A COUNTRY
NEGLECTS TO IMPROVE ITS INFRASTRUCTURE at:
Via Mercopress
BRAZIL’ aircraft manufacturer
Embrear is again resurfacing suspicions regarding the sale of commercial planes
to Aerolineas Argentinas involving
several million dollars in surcharges. The company informed the US Securities
and Exchange Commission, SEC, that it is investigating companies from five
different countries to which it sold aircraft allegedly in transactions
suspicious of irregularities.
2009 LIST PRICE FOR E-190 AMOUNTED TO 27.85 MILLION;
ARGENTINA ALLEGEDLY PURCHASED THE BRAZILIAN AIRPLANE FOR 34.9 MILLION US
DOLLARS PER UNIT
In 2009 ARGENTINA signed an
agreement for the purchase of 20 Embraer E-190 aircraft for government
controlled Austral, an operation
apparently involving 698 million dollars with a unit price of 34.9 million
dollars. The E-190 is considered a mid range aircraft highly competitive and
with a capacity of 100 to 115 pax.
However this sum is considered
excessive by analysts if compared with what the going market price was at the
time. The operation 80% financed by the BRAZILIAN Economic and Social
development bank, BNDES, was signed by Federal
Planning minister Julio De Vido; then Transport
Secretary Ricardo Jaime and then Aerolineas
Argentinas president and currently Justice
minister Julio Alak.
ARGENTINE GOVERNMENT HAD PAID 5 TO 6 MILLION DOLLARS IN
EXCESS FOR EACH AIRCRAFT
Magistrate Sergio Torres opened an
investigation on suspicion that the ARGENTINE government had paid 5 to 6
million dollars in excess for each aircraft, which would add up to 100/120
million dollars. Aerolineas Argentinas
and the government rejected the claims arguing that in effect the original
price was 30.6 million for each unit and the additional 4.3 million was the
result of spare parts and pilot training.
The situation set off alarm bells in
the aircraft industry and a warning from UNITED STATES SEC office to which the BRAZILIAN
government responded by opening an internal investigation.
And last month Embraer sent an
update report to SEC on investigations so far: “We received a summons from SEC
in September 2010 requesting about certain operations relative to overseas sale
of aircraft. In reply and to consultations over possible breach of US
legislation on foreign corrupt practices, we contracted a foreign solicitor for
an internal investigation into transactions with three specific countries”.
COMMON AVIATION INDUSTRY PRACTICE IS TO GIVE CONSIDERABLE
REBATES WHEN LARGE AIRCRAFT DEALS ARE SIGNED
Likewise Embrear says it is willing
to expand the area of investigation and has done so including two additional
countries and in close cooperation with the US Secretary of Justice and SEC.
“In case authorities decide on measures against us or the sides involved reach
an agreement to solve the issue, we could be obliged to pay strong fines or
incur in other sanctions”.
The case not only refers to market
prices of the time but to the fact that when a big number of aircraft are
involved, they usually are benefited with additional rebates.
According to the specialized magazine Aircraft Commerce,
in November 2008, an E-190 was sold to Aeroméxico for 29 million dollars and in
July 2009, TACA airlines paid 30.5 million dollars for an E-195. Air Europa in
2009 paid 31 million dollars, also confirmed by the Airline Fleet Management
magazine. Finally Ascend Aviation Insight said that in 2009, the E-190 had a
going price of 27.85 million.
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