LATAM Airlines to pay $22 million over Argentine bribes case

The logo of LAN Airlines, now known as LATAM Airlines, is seen at its office in Caracas, Venezuela May 30, 2016. REUTERS/Carlos Garcia Rawlins

WASHINGTON/SANTIAGO (Reuters) - LATAM Airlines Group SA , Latin America’s largest airline, has agreed to pay more than $22 million in civil and criminal fines relating to a decade-old Argentine bribery case, U.S. authorities said Monday.

The U.S. Securities and Exchange Commission said the fine of LATAM unit LAN related to “improper payments it authorized during a dispute between the airline and its union employees in Argentina”.

The payments date back to 2006 to 2007, the company said in a separate statement, predating Chile-based LAN’s 2012 merger with Brazil’s TAM.

LAN had used an Argentine consultant to negotiate with unions on the company’s behalf and paid the consultant via a sham contract that channeled funds to corrupt union officials, the SEC said.

The scheme had violated the accounting provisions of the Foreign Corrupt Practices Act, the U.S. Justice Department said, and the airline agreed to pay a $12.75 million criminal penalty.

It will pay a further $9.4 million, including interest, to settle the SEC’s charges of inadequate accounting controls.

In February, Ignacio Cueto, now LAN’s chief executive, was ordered to pay a $75,000 fine over the same case. A member of the airline’s controlling Cueto family, he was LAN chief operating officer at the time.

LATAM Airlines said it “has cooperated fully with relevant authorities throughout this process,” adding that “significant improvements” had been made to compliance and internal accounting since the events.

Reporting by Mohammad Zargham in Washington and Rosalba O’Brien in Santiago; Editing by Jonathan Oatis