AAR Corp. Concludes DOJ and SEC Investigations Regarding FCPA Violations

AAR Corp. Resolves DOJ and SEC Investigations

AAR CORP. (NYSE: AIR) recently announced a significant development in its ongoing legal affairs, having reached resolutions with both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) regarding potential violations of the U.S. Foreign Corrupt Practices Act (FCPA). This conclusion marks a crucial moment for the company, as it brings to a close investigations stemming from certain transactions conducted in 2016 and 2017 in Nepal and South Africa.

In an effort to address these issues proactively, AAR self-reported the potential violations to the DOJ and SEC back in 2019. The company's willingness to cooperate has been pivotal; it has undergone extensive scrutiny over several years involving in-depth investigations conducted by both federal agencies. As a result of their findings, AAR has entered into a Non-Prosecution Agreement (NPA) with the DOJ, while the SEC has accepted AAR's Offer of Settlement and issued a cease-and-desist order concerning the company’s actions.

According to the resolutions, the inappropriate conduct primarily involved a former employee from one of AAR's subsidiaries, in conjunction with previous third-party agents. As part of the settlement, AAR is responsible for a total financial liability amounting to $55,599,653. This figure includes penalties, forfeiture, and prejudgment interest. AAR will absorb this expense as a one-time charge reflected in its consolidated financial statements for the second quarter of the fiscal year 2025.

In light of these decisions, AAR plans to finance the required payments using a mix of existing cash resources and borrowing capabilities available through its revolving credit facility. John M. Holmes, the Chairman, President, and CEO of AAR, expressed his satisfaction regarding the resolution, stating, “We are pleased to resolve these matters with the DOJ and SEC. We thank them for their collaboration and recognition of the substantial cooperation from our side.” He emphasized AAR's ongoing commitment to transparency and ethical practices in all business operations as the firm continues to provide innovative, value-driven solutions worldwide.

Since the initial self-reporting in 2019, AAR has taken comprehensive measures to improve its global compliance program. The company has implemented various remedial actions, and both the DOJ and SEC acknowledged these efforts during the resolution process. As a result, AAR aims to reinforce its reputation as a socially responsible global player in the aerospace and defense sectors, operating with integrity and compliance.

AAR CORP. is a premier provider of aerospace and defense aftermarket solutions, with operations extending across more than 20 countries. The company, which is headquartered near Chicago, offers a broad range of services that includes parts supply, repair engineering, integrated solutions, and expeditionary services tailored for commercial and government clients.

Navigating compliance in the aviation and defense arenas presents its unique challenges, especially concerning international operations, where regulations can vary significantly. However, AAR’s resolve to address these matters head-on signifies a growing recognition in the corporate world of the importance of ethical standards and regulatory compliance.

Moving forward, the company remains focused on achieving its operational and strategic goals without compromising ethical practices, as it seeks to ensure that, regardless of the challenges posed, it continues delivering value to its customers while upholding the law.