UPDATE 2-Defense chief at Brazil's Embraer to step down next year

Thu Dec 5, 2013 5:09pm EST

By Brad Haynes

SAO PAULO Dec 5 (Reuters) - The head of defense for Brazilian planemaker Embraer SA will leave the company at the beginning of next year, the company said on Thursday, after restructuring the division and raising compliance standards amid a bribery investigation.

Luiz Carlos Aguiar will step down after 10 years at Embraer, passing the reins at the defense division to Jackson Schneider, currently the head of human resources and institutional relations at Embraer, the company said. Reuters reported Aguiar's departure plans earlier in the day, citing a source with direct knowledge of the matter.

Aguiar took over Embraer's defense unit at the beginning of 2011, more than a year after a $92 million deal with the armed forces of the Dominican Republic that triggered a corruption investigation by U.S. and Brazilian authorities.

The investigation, which the U.S. Department of Justice and the U.S. Securities and Exchange Commission launched under the Foreign Corrupt Practices Act in 2010, has expanded to involve other countries and prompted internal scrutiny of Embraer's sales practices.

Brazilian prosecutors have also begun a criminal probe of the executives involved. Aguiar has not been questioned in the investigation, said the source, who declined to be named given the sensitivity of the matter.

In a statement, Embraer said Aguiar's departure will be effective Feb. 28, 2014. Between Jan. 1 and that day, the executive will work with Schneider on a transition, the statement added.

Schneider joined Embraer from Mercedes Benz in 2011 after a career that started in public service. He has been president of national automakers' association Anfavea and a member of the finance ministry's taxpayer council.

He will take over the defense unit, Embraer's fastest-growing division, as the government is set to become an even bigger client for the world's No.3 commercial plane maker.

Next year, Brazil's Air Force is expected to sign a firm order for the first of Embraer's KC-390 military cargo jets after investing $2 billion on development of a transport plane to take on Lockheed Martin's Hercules airlifter.

In a separate move also announced in the statement, Ernest Joseph Edwards, senior vice president in charge of Embraer's executive aviation, will leave his position on Dec. 31. The company named Marco Tulio Pellegrini to replace Edwards, the statement added.