South American-based LAN Airlines will pay more than $22 million to settle parallel civil and criminal cases related to improper payments it authorized during a dispute between the airline and its union employees in Argentina. An SEC investigation found that when LAN encountered problems negotiating labor agreements with the unions, it was contacted by a consultant from Argentina, then a Cabinet Advisor with the Department of Transportation, who offered to negotiating on the company’s behalf. The consultant made clear that he would expect compensation and that payments would be made to third parties who had influence over the unions. LAN’s CEO approved $1.15 million in payments to the consultant through a sham contract for a purported study of existing air routes in Argentina. The CEO knew that no actual study would be performed and that it was possible the consultant would pass some portion of the money to union officials in Argentina to settle the wage disputes. SEC
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