According to the airline, the search and seizure of information by the national prosecutor’s office is related to allegations and cover-up of Avianca’s potentially improper bribery by senior executives and members of the board of directors of government officials with airline tickets, upgrades and discounts; which could, under the law of some countries where Avianca operates, be against the law.

“Today, the Office of the Attorney General of Colombia served Avianca with a search warrant of its offices with the objective of collecting information related to this investigation.”

Avianca admits that the business practice was discovered in 2017 by internal auditors, but was not disclosed until the autumn of 2019, well after the former CEO and members of the previous board were dismissed and replaced.

The law firm of Ropes & Gray, contracted by the airline to investigate its role in the Airbus bribery scandal, is also conducting an investigation on behalf of the airline into these potential legal violations. Apparently, Avianca will also need to retain criminal counsel. In addition to these legal complications in Colombia, the potential bribery has also been reported by the airline to the U.S. Department of Justice and the US Securities and Exchange Commission (SEC).

Avianca, in a statement shared with Finance Colombia said: “As has been its practice, Avianca has cooperated and will continue to cooperate with all pertinent authorities. Avianca will provide the information being requested to the Office of the Attorney General of Colombia, while exercising its legal rights to ensure that its confidential and privileged information remains protected.”

Avianca’s statement follows:

We are undertaking an internal investigation to determine whether we may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”) and other laws and, if we are found to be in violation of such laws, we could be subject to criminal and civil remedies, including sanctions and monetary penalties, which could, among other things, harm our reputation and materially and adversely affect our business, financial condition and results of operations and ability to service the Secured Notes.

Through our internal processes, in 2017 we discovered a business practice whereby company employees, including members of senior management, as well as certain members of the board of directors, provided “things of value,” which based on our current understanding we believe to have been limited to free and discounted airline tickets and upgrades, to government employees in certain countries. We commenced an internal investigation and retained outside counsel and a forensic investigatory firm to determine whether this practice may have violated the FCPA or other potentially applicable U.S. and non-U.S. anti-corruption laws and received preliminary recommendations from counsel. In 2018, we implemented certain revisions to our policies designed to prevent such practice from occurring in the future, including limiting the number of persons at the Company who are authorized to issue free and discounted airline tickets and upgrades, and requiring additional internal approvals. We are continuing to investigate, supervised by our Audit Committee, and review if further controls or procedures should be implemented and are in the process of engaging outside counsel and a forensic investigatory firm to conduct such further investigation.

Based on our investigations to date, we have implemented additional controls that restrict the issuance of free or discounted tickets and upgrades, particularly by senior management and members of our board of directors, and we will maintain such restrictions in place until such time as outside counsel advises that our controls are effective to comply with applicable law in each relevant jurisdiction. On August 13, 2019, we voluntarily disclosed this investigation to both the U.S. Department of Justice and the SEC, and we are cooperating with both agencies. We will also disclose this investigation to the Colombian Financial Superintendence. Our internal investigation is not complete and we cannot predict the outcome of this internal investigation or what potential actions may be taken by the U.S. Department of Justice, the SEC or local regulators or officials. If it is found that the business practice violated the FCPA or other similar laws applicable to us, we could be subject to criminal and civil remedies, including sanctions, monetary penalties and regulatory actions, which could, among other things, harm our reputation and materially and adversely affect our business, financial condition and results of operations, including, without limitation, our ability to service the Secured Notes.

The Salvador-based company, whose former CEO Marcelo Odebrecht was sentenced to 19 years in prison last March for corruption, money laundering and conspiracy, admitted to violating the Foreign Corrupt Practices Act by paying what Justice Department documents show as nearly $800 million in bribes throughout a dozen countries since 2001 to win bids that have generated more than $3.3 billion in profits.

Much of the illicit activity centered around corruption that led to lucrative contracts with embroiled state-run Brazilian oil company Petrobras in a scandal that has shaken the nation’s political world. The firm also won almost $1.5 billion USD in contracts from Mexican energy giant Pemex.

Some $11 million USD in bribes were made in Colombia, where government officials have responded by threatening to void tainted project awards. Even before the settlement, the nation began looking for a new suitor to take over a $857 million USD project to make the Magdalena River more navigable that had previously been won by Odebrecht.

A bulk of the bribes in Colombia took place during the administration of former President Álvaro Uribe, including an alleged $6.5 million illicit payment to a government official in charge of awarding a large constuction project. According to local media, Gabriel García Morales was the one who took the bribe for his role in awarding a bid for a large section of the country’s Ruta del Sol roadway project.

On Twitter, Uribe acknowledged that “primary indications” suggest that García had taken bribes during his administration. He urged for the “most severe sanction” for anyone found guilty of receiving bribes, both on his watch or since Santos took over.

Other contracts awarded to Odebrecht more recently, including the the Magdalena River renovation as well as the Puerto Boyacá-Chiquinquirá and Ocaña-Gamarra highway projects, have come during the administration of President Juan Manual Santos, who took office in August 2010.

Uribe, who is now a senator and the chief political rival to Santos, is urging for the president to reveal all information, including the possibility of a meeting with the firm in Panama last year, related to how such bids were won by Odebrecht. “Tell the country everything you know about these bribes,” said Uribe this week.

Odebrecht has said that it can only afford to pay $2.6 billion USD of the imposed fine from a settlement that also includes Braskem SA, an Odebrecht affiliate. The São Paulo-based petrochemicals manufacturer may pay as much as $632 million USD to the Justice Department and $325 million USD to the Securities and Exchange Commission (SEC) in the United States. The final penalty sums are expected to be determined in an April 17 hearing.

“Odebrecht has admitted that for more than a decade it operated an off-books internal financial structure whose sole purpose was to facilitate bribery on a massive scale,” said Sung-Hee Suh, a deputy assistant attorney general on a media call, per the Miami Herald. “This was a hidden but fully functioning Odebrecht business unit — a department of bribery so to speak — that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents.”

This article has been edited and updated to include more information about projects in Colombia.

Photo Credit: Rogério Reis