The FCPA Files: Page Airways, Inc. (1978)
From its debut in 1966, the Grumman Gulfstream II jet stood out as a turbo-powered symbol of luxury business travel. With room for a dozen passengers, a transcontinental flight range, and aerodynamics that would make a NASA engineer blush, it was the vehicle of choice for discerning executives and heads of state worldwide.
Still, they didn’t quite sell themselves; that prerogative belonged to Page Airways, founded in 1939 by James P. Wilmot in his hometown of Rochester, New York. The company began as a flight instruction provider, taking advantage of the U.S. government’s eve-of-war interest in strengthening the nation’s aviation capacity. Over the years it grew in both size and scope, alongside Wilmot’s own formidable clout as a political fundraiser.
The FCPA had been around for only a few months when the SEC filed a civil action against Page, Wilmot, and five other Page executives. The allegations concerned the company’s sales activities in half a dozen countries in Africa, the Middle East, and Southeast Asia.
We see some familiar patterns: presidential kickbacks in Gabon, for example, and side payments to well-connected development organizations in Malaysia and the Ivory Coast. Others details stand out a bit more: certain third-party arrangements in connection with Morocco and Saudi Arabia that “left over $5 million of the proceeds of Gulfstream II sales unaccounted for” and the creation of a secret subsidiary to do business with Idi Amin’s Uganda. (Plus giving the dictator a Cadillac Eldorado—the one allegation tying the case to the FCPA proper, given the events’ timing.)
The case didn’t go to trial. After getting venue transferred from the District of Columbia to Rochester, the company’s lawyer served a subpoena on the CIA demanding any information it might have concerning the above-described activities. Before long, the case was settled—individuals dismissed, company enjoined, monitor appointed—with the telling digest notation: “In reaching settlement of this action, the Commission and Page considered concerns raised by another agency of the United States Government regarding matters of national interest.”
Aviation and national interest have never been far apart. The FCPA itself was born amid concerns about corruption in the sale of military aircraft and its effect on the United States' international repute. It isn’t surprising that an intelligence agency might have connections with those selling private jets to world leaders in global hotspots. We’ll leave further speculation to others.
This post is part of "The FCPA Files" series, examining key enforcement cases under the Foreign Corrupt Practices Act and the lessons they offer for modern compliance. |