In re AAR CORP.

 
 
  
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101987 / December 19, 2024 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4550 / December 19, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22369 
 
 
In the Matter of 
 
AAR CORP., 
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”) against AAR CORP. (“AAR” or “Respondent”).  
 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, Respondent admits the Commission’s jurisdiction over it and the 
subject matter of these proceedings, and consents to the entry of this Order Instituting Cease-and-
Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
 

 2 
III. 
 
 On the basis of this Order and Respondent’s  Offer of Settlement, the Commission finds
1
 that:  
 
SUMMARY 
 
1. This matter concerns violations of the anti-bribery, books and records, and internal 
accounting controls provisions of the Foreign Corrupt Practices Act of 1977 (the “FCPA”) by   AAR, 
a provider of aviation products and services, arising from two separate bribery schemes. One 
scheme was in connection with the sale of two Airbus A330 aircraft to Nepal Airlines Corporation 
(“Nepal Airlines”), a government-owned airline, and the second was in connection with the sale of 
aftermarket aviation services to SAA Technical (SOC) Ltd. (“South African Airways Technical”),    
a subsidiary of South African Airways (SOC) Ltd (“South African Airways”), a government-
owned airline. 
 
2.  The improper payments were in the form of sham commissions and fees payable to 
government officials through the use of a third-party agent and joint venture partner. The 
misconduct also involved a now-former high-level employee of an AAR subsidiary, Deepak 
Sharma. The payments were in violation of AAR policies and were falsely recorded on the 
company’s books and records as legitimate expenses. 
 
RESPONDENT 
 
3. AAR is a provider of aviation products and services. AAR and its wholly owned 
subsidiaries currently have approximately 5,700 employees and hold approximately $2.8 billion in 
total assets. AAR is incorporated in Delaware with its principal executive offices in Illinois. The 
company’s common stock is registered with the Commission pursuant to Section 12(b) of the 
Exchange Act, and it files periodic reports with the Commission pursuant to Section 13 of the 
Exchange Act. The company’s common stock trades on the New York Stock Exchange under the 
ticker symbol AIR.  
 
 
1
   The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 
 

 3 
OTHER RELEVANT ENTITIES AND INDIVIDUALS 
 
4. Deepak Sharma (“Sharma”), age 46, was President of International Supply 
Chain for a wholly owned AAR subsidiary, from November 2015 until his suspension in April 
2019.  He resigned from AAR in September 2019. Sharma, a UK citizen residing in the UK. 
After starting at the AAR subsidiary, Sharma was the lead executive responsible for the Nepal 
Airlines transaction. During the relevant period, Sharma signed SOX sub-certifications as 
President of International Supply Chain. In August 2024, in connection with the Nepal Airlines 
scheme, Sharma pleaded guilty to a one-count criminal information filed in the US charging him 
with conspiracy to violate the anti-bribery provisions of the FCPA, in violation of 18 U.S.C. § 
371. 
 
5. Nepal Airlines is a state-owned airline and the flag carrier for the government of 
Nepal. It was founded in 1958 and is the oldest airline in the country. In 2015, it was looking to 
expand its international fleet through the purchase of two wide-body aircraft. 
 
6. Consortium Party A, a German corporation, was part of a consortium with an 
AAR subsidiary involved in bidding on the sale of two Airbus A330 aircraft to Nepal Airlines. It 
established a special purpose vehicle to facilitate the sale. 
 
7. Consortium Party B, a Portuguese charter airline, was part of a consortium with 
an AAR subsidiary involved in bidding on the sale of two Airbus A330 aircraft to Nepal Airlines. It 
had the right to purchase the two Airbus planes, which it assigned to a special purpose vehicle. 
 
8. Special Purpose Vehicle was a special purpose vehicle established by Consortium 
Party A for the purpose of facilitating the sale of two Airbus A330 aircraft to Nepal Airlines. 
 
9. Principal AB, a Nepalese national, controlled Third-Party Agent A and Third-Party 
Agent B.  In connection with the Nepal transaction, an AAR subsidiary, Consortium Party A , and 
Special Purpose Vehicle retained Principal AB.  
 
10. Third-Party Agent A, a Hong Kong corporation, was controlled by Principal AB 
and purportedly involved in the telecommunications business.  
 
11. Third-Party Agent B, a Dubai-based entity incorporated in the UAE, was formed 
and controlled by Principal AB as a successor entity to Third-Party Agent A.  
 
12. South African   Airways is a South African government-owned airline. 
 
13. South African Airways Technical is a state-owned subsidiary of South African 
Airways that provides aircraft maintenance services to various commercial airlines. 
 

 4 
14. Joint Venture Party was formed in 2015 as a South African Broad-Based Black 
Economic Empowerment (“BBBEE”) entity. The principals of Joint Venture Party were Principal 
1, Principal 2, and two of Principal 2’s daughters. On January 4, 2022, after AAR had terminated 
the relationship with Joint Venture Party and South African Airways Technical, a  n investigative 
commission of the South African government found that Principal 1, Principal 2, and Joint Venture 
Party bribed government officials in connection with a transaction unrelated to AAR. That 
commission did not make findings of corruption as to AAR or its arrangement with J oint Venture 
Party but found that the award of the component tender to Joint Venture Party was unlawful and 
irregular. .   
 
FACTS 
 
Nepal Bribery Scheme 
 
15. From at least November 2015 through 2018, Sharma, a then senior executive at an 
AAR subsidiary, orchestrated and implemented a bribery scheme to win a contract for the sale to 
Nepal Airlines of two Airbus A330 aircraft valued at approximately $210 million. As part of the 
scheme, an AAR subsidiary retained Third-Party Agent A, whose role was to pay bribes to 
officials who had control over the Nepal Airlines contract. AAR terminated its relationship with 
Third-Party Agent A prior to the transaction closing, resulting in Sharma arranging to have 
Consortium Party A pay Third-Party Agent A and its successor entity, Third-Party Agent B, a 
success fee for winning the Nepal Airlines contract.  
 
16. In 2015, Sharma was hired as President of the International Supply Chain for an 
AAR subsidiary. At the time, Sharma suggested that he could help secure the Nepal Airlines 
opportunity. Upon arriving at AAR, Sharma pursued the opportunity as the lead employee 
responsible for winning the Nepal Airlines contract, reporting directly to an AAR executive. 
Sharma’s internal communications to AAR personnel suggested that the Nepal Airlines request 
for proposal (“RFP”) would be drafted to favor AAR. For example, on November 22, 2015, 
Sharma sent an internal email conveying that he had a “good meeting” with the “CEO of [Nepal] 
airlines” and that the RFP for the transaction would be written in favor of AAR. In a follow-up 
December internal email, Sharma forwarded email correspondence between himself and the Nepal 
Airlines’ Managing Director, adding that the Managing Director was “100% relying on us to bid 
and win this aircraft sales” contract. 
 

 5 
17.  Starting at least as early as December 2015, Sharma worked with Principal AB, a 
Nepalese individual who controlled Third-Party Agent A, and its successor entity, Third-Party 
Agent B, and with Nepalese officials to help AAR win the Nepal Airlines contract. I  n March, 
2016, Sharma secured, and shared internally at AAR, an unpublished draft of the RFP for AAR 
executives to “comment” on and “change any terms to suit AAR.” As a result, Sharma and others 
at AAR proposed changes to the draft RFP to benefit AAR in the bidding process. A few months 
later, Sharma emailed the Nepal Airlines’ Managing Director adding specifications to the RFP, and 
then forwarded this email internally, writing that the “way this RFP is going no one else will 
qualify to bid except AAR.” On September 26, 2016, the RFP was officially published. Upon 
publication, Sharma reported in an internal email that the RFP was “designed for us.”  
 
18. Soon after the RFP was published, Sharma discussed internally the need to engage 
Third-Party Agent A as an agent on the Nepal Airlines transaction. In doing so, Sharma noted that 
he would “pull all political strings in Nepal” and that setting up a foreign representative agreement 
(“FRA”) with Third-Party Agent A would help “lock . . . in” the Nepal Airlines transaction. Third-
Party Agent A, based in Hong Kong and purportedly a telecommunications business, was engaged 
by an AAR subsidiary despite red flags raised during due diligence including: (1) its lack of any 
aviation industry experience; (2) limited and vague descriptions of the services it would provide; 
(3) that two customer references provided by Third-Party Agent A involved sales of cellphones 
and electronics; and (4) a higher than normal commission rate.  
 
19. On November 1, 2016, Third-Party Agent A was officially engaged pursuant to the 
FRA. Under the FRA, Third-Party Agent A would receive a commission payment of 7% of the 
final sales price of the two aircraft,  and the commission payment was estimated to be between $9.6 
and $14.6 million. An internal AAR PowerPoint noted the arrangement to be “necessary” for AAR 
to win the Nepal Airlines transaction. 
 
20. On November 8, 2016, an AAR subsidiary formed a consortium through a 
framework agreement with Consortium Party A and Consortium Party B (collectively the “AAR 
Consortium”) to submit a bid on the Nepal Airlines transaction. Under the initial structure, AAR 
would provide the aircraft, Consortium Party A would provide the financing, and Consortium Party 
B would provide services, spare parts, and tooling. Consortium Party B would also assign the right 
it held to purchase two A330 aircraft from Airbus to Special Purpose Vehicle, which would be 
created by Consortium Party A. To purchase the aircraft, Consortium Party A would use Special 
Purpose Vehicle to buy the two A330 aircraft from Airbus, and Special Purpose Vehicle would 
then sell the aircraft to AAR, which in turn would sell the aircraft to Nepal Airlines. AAR 
estimated that it would make between $8 million to $12 million from that    transaction structure.  
 
21. On November 9, 2016, the AAR Consortium submitted its bid in response to the 
RFP. The cover letter for the bid was addressed to Nepal Airlines’ Managing Director from 
Sharma. The next day, Sharma texted an AAR executive “we got the Nepal deal.”   
 

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22. On or around December 1, 2016, AAR executives learned from Sharma that money 
going to Third-Party Agent A would be used to make donations to political parties in Nepal as part 
of the Nepal Airlines transaction. On December 4, 2016, AAR received an anonymous email 
alleging bribery related to the Nepal Airlines transaction. As a result of learning from Sharma that 
Third-Party Agent A would be making these payments, AAR terminated Third-Party Agent A on 
December 9, 2016. On January 16, 2017, Nepal Airlines notified AAR that its board had approved 
the AAR Consortium’s bid. 
 
 
23. The transaction was restructured such that Special Purpose Vehicle would buy the 
two A330 aircraft from Airbus, but rather than selling them to AAR,  Special Purpose Vehicle 
would sell the aircraft directly to Nepal Airlines, and, for negotiating the transaction, AAR would 
receive a $6 million commission (rather than the originally contemplated $9.6-14.6 million 
commission).  
 
24. As part of the termination of the FRA, the AAR subsidiary and Third-Party Agent 
A executed a termination and separate fee agreement that provided Third-Party Agent A with 
$250,000 as “full payment to” Third-Party Agent A “for its time and costs associated with its 
efforts relating to the sale of [the] aircraft” upon the delivery of the two aircraft to Nepal Airlines 
and after payment to the AAR subsidiary.  
 
25. Sharma subsequently put in place a May 2017 agreement between Third-Party 
Agent A and Consortium Party A pursuant to which Consortium Party A would pay Third-Party 
Agent A a commission of $4 million per aircraft ($8 million for the two aircraft). The agreement 
was backdated to October 7, 2016, to make it look like it was in place at the time the AAR 
Consortium placed its bid. A subsequent July 2017 agreement replaced Consortium Party A with 
Special Purpose Vehicle in Consortium Party A’s agreement with Third-  Party Agent A, making 
Special Purpose Vehicle the entity responsible for paying the relevant sales commission to Third-
Party Agent A. 
 
26. However, when the Nepal Airlines transaction closed, Consortium Party A’s 
payments (through Special Purpose Vehicle) to Third-Party Agent A w ere blocked due to its 
financial institution’s “Know Your Customer” rules. This resulted in Sharma working with 
Principal AB to form a new company, Third-Party Agent B, to receive payments from Consortium 
Party A. Third-Party Agent B was incorporated in UAE (Dubai) on October 22, 2017, with 
Principal AB’s son as one of its two shareholders. Sharma then worked with Principal AB to assign 
to  Third-Party Agent B Third-Party Agent A’s rights under the Special Purpose Vehicle/Third-
Party Agent A agreement. In 2018, AAR paid Third-Party Agent A the $250,000 commission via a 
wire transfer through at least one US correspondent bank and Consortium Party A/Special Purpose 
Vehicle paid Third-Party Agent B $2.6 million. In coordinating the payment to Third Party Agent 
A, Sharma communicated via email with AAR personnel located in the US. 
 

 7 
27. While the payment to Third-Party Agent A was part of the bribery scheme and the 
AAR subsidiary lacked documentary evidence reflecting any legitimate services actually 
performed by Third-Party Agent A, the $250,000 commission payment was recorded by the AAR 
subsidiary as a legitimate commission expense.  
 
28. AAR failed to devise and maintain internal accounting controls related to vendor 
management and accounts payable sufficient to provide reasonable assurances that AAR personnel 
were adhering to AAR’s Global Anti-Corruption Policy and its procedures regarding the retention 
of and payments to third-party agents. 
 
29.  As a result of this misconduct, AAR was unjustly enriched by $6,000,000. 
  
South Africa Bribery Scheme 
 
30. From January 2016 through February 2020, Joint Venture Party, AAR’s agent in 
South Africa, bribed South African government officials to obtain a contract for an AAR 
subsidiary to provide aftermarket aviation services to South African Airways Technical. The bribes 
were funded by money paid to Joint Venture Party from AAR as “success fee payments” and 
“commissions” that were falsely designated in AAR’s books and records as legitimate business 
expenses. Sharma facilitated these payments and Principal 1, a principal of Joint Venture Party, 
arranged for and invoiced the bribes, while his partner, Principal 2, paid them to the officials. 
 
31. Between 2011 and 2015, AAR had repeatedly tried unsuccessfully to enter South 
Africa’s aviation market. As a result, a now former AAR executive sought to cultivate 
relationships with South African officials, including South African Airways Technical’s 
Chairperson (Government Official 1) and South African Airways Technical’s Head of 
Procurement (Government Official 2).   
 
32. Following a failed AAR bid on a South African Airways Technical contract using 
a BBBEE
2
 partner AAR had selected, Government Official 2 advised the former AAR executive 
in an August 18, 2015 email that, “the selection [of a BBBEE partner] . . . should be a decision 
by both the parties; however, it seems that AAR is far ahead with this without [South African 
Airways Technical]’s involvement and input.  We believe that being a State-Owned Company 
[South African Airways Technical] is in the right position to drive the process.” Shortly 
thereafter, at a September 2015 dinner in South Africa, Government Official 1 introduced the 
former AAR executive to Principal 2, a principal of Joint Venture Party, which was an accredited 
BBBEE partner and an approved aviation services vendor for South African Airways and South 
African Airways Technical. On December 14, 2015, Joint Venture Party advised the former 
AAR executive that Joint Venture Party had a “special relationship” with South African Airways 
Technical. 
 
 
2
   BBBEE is a policy of the South African government which aims to facilitate broader participation in 
the economy and viable economic empowerment by Black South Africans. It is intended to redress the 
inequalities and inequities created by Apartheid.
 

 8 
33. Joint Venture Party described this “special” relationship to others at AAR, 
including Sharma, and on December 3, 2015, an AAR subsidiary entered into a Collaboration 
Agreement with Joint Venture Party. This initial agreement provided that Joint Venture Party 
would assist AAR in obtaining supply parts and services contracts in exchange for a 5% 
commission. The agreement contemplated the parties entering into a n FRA, although that never 
occurred. 
 
 
34. On December 8, 2015, South African Airways Technical issued a request for bids 
for Component Support Services on its Boeing and Airbus fleets.   
 
35. In early January 2016, Joint Venture Party principals met with Government 
Official 2, and they openly discussed that Government Official 1, Government Official 2, and 
Government Official 3 (who was the acting Chief Executive Officer of South African Airways) 
would be sharing in the AAR contract proceeds along with Joint Venture Party. In return for this 
arrangement, Government Official 2 would ensure that AAR would be awarded the bid. 
 
36. In order for the contract to be economical for Joint Venture Party, Joint Venture 
Party required   an upfront success fee from AAR. Sharma was kept informed of this scheme and 
clearly understood from Joint Venture Party that officials needed to be paid for AAR to win the 
South African Airways Technical bid. 
 
37. The bid was due on January 18, 2016, and a Joint Venture Agreement was 
executed between an AAR subsidiary and Joint Venture Party that day. However, to have 
sufficient funds to pay the bribes going forward, prior to executing the Agreement, and prior to 
submitting the bid, Joint Venture Party demanded a 3% success fee from AAR in addition to the 
agreed upon 5% commission on all gross revenues. Sharma countered with a 1.5% success fee 
made in equal payments at the end of every quarter from service commencement, for the first 
service year.  
 
38. As part of ensuring AAR would be awarded the contract, one of the government 
officials provided Joint Venture Party with guidance on how to best meet the specifics of the 
request for bids as well as confidential nonpublic information, including notes of competitors’ 
bids and pricing, which was shared with  Sharma through emails and texts sent to Sharma and 
others in the US, as well as to a principal of the Joint Venture Party who was, at times, in 
California. AAR knew it was receiving inside information to secure the award of the bid but did 
not inquire as to how that information was obtained. 
 
39. The AAR subsidiary was, in fact, awarded the contract, and in July 2016, the 
AAR subsidiary, Joint Venture Party, and South African Airways Technical signed a Component 
Support Agreement. After the contract was awarded, the incumbent service provider challenged 
the award. A South African court rejected this challenge.  Servicing pursuant to the Component 
Support Agreement began in October 2016.  
 
40. The AAR subsidiary paid Joint Venture Party $150,000 on September 1, 2016, as 
an advance on its first success fee payment, via a wire transfer through US bank accounts. This 

 9 
initial payment was split among Principal 1 of the Joint Venture Party, Principal 2 of the Joint 
Venture Party, Government Official 1, Government Official 2, and Government Official 3. The 
bribe payments continued throughout the course of the contract and were tracked by and 
accounted for monthly by Joint Venture Party. 
 
41. Throughout the contract term, Joint Venture Party continued to request more 
money from AAR and continued to seek its originally requested 3% success fee. While Sharma 
and a now former AAR executive together tried to find ways to increase Joint Venture Party’s 
compensation through a rate increase, the success fee itself was not changed. Moreover, by 
December 2019, South African Airways was in financial straits and could no longer assist in the 
funding of South African Airways Technical. Thereafter, South African Airways Technical 
suffered severe financial distress and was in turn unable to meet its payment obligations to AAR. 
 
42. When AAR asked Joint Venture Party to address reports of its potential corrupt 
conduct made in certain testimony before a public commission in South Africa, including an 
illicit payment made by Principal 2 to Government Official 2 in an unrelated, sham real estate 
transaction not involving AAR, Joint Venture Party tendered false documents to AAR. As a 
result, AAR terminated the Component Services Agreement and asked for an audit of Joint 
Venture Party, which Joint Venture Party declined. Shortly after February 14, 2020, AAR 
terminated the relationship with Joint Venture Party. In total, over the term of the Component 
Support Agreement with South African Airways Technical AAR paid $1.24 million in success 
fees and $4.16 million in commission payments to Joint Venture Party, for a total of $5.4 
million. 
 
43. As a result of this misconduct, AAR was unjustly enriched by $17,451,100.  
 
LEGAL STANDARDS AND VIOLATIONS 
 
44. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-
and-desist order upon any person who is violating, has violated, or is about to violate any provision 
of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was, 
or would be a cause of the violation, due to an act or omission the person knew or should have 
known would contribute to such violation. 
 
45. Section 30A(a) of the Exchange Act, an anti-bribery provision of the Exchange Act, 
provides, in relevant part, that it is unlawful for any issuer with a class of securities registered 
pursuant to Section 12 of the Exchange Act or which is required to file reports under Section 15(d) 
of the Exchange Act, or any employee or agent of such issuer, to make use of the mails or any 
means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, 
promise to pay, or authorization of the payment of any money, or offer, gift or promise to give 
anything of value to any foreign official for purposes of influencing any act or decision of such 
foreign official in his official capacity, or to any foreign political party or party official for 
purposes of influencing any act or decision of such party or party official in its official capacity, in 
order to assist such issuer in obtaining or retaining business for or with any person. 15 U.S.C. § 
78dd-1(a). As a result of improper payments made through an AAR subsidiary’s third-party agent 

 10 
and joint venture partner to foreign officials in Nepal and South Africa, AAR was able to obtain 
business from state-owned actors as described above. As a result of the conduct described above, 
AAR violated Exchange Act Section 30A(a). 
 
46. Section 13(b)(2)(A) of the Exchange Act, part of the books and records provisions 
of the FCPA, requires, in relevant part, that every issuer with a class of securities registered 
pursuant to Section 12 of the Exchange Act or which is required to file reports under Section 15(d) 
of the Exchange Act, to make and keep books, records, and accounts which, in reasonable detail, 
accurately and fairly reflect the transactions and disposition of the assets of the issuer. 15 U.S.C. § 
78m(b)(2)(A). As a result of the conduct described above, AAR’s books and records inaccurately 
characterized commission payments and success fees to the third-party agent and joint venture 
partner in  connection with the Nepal and South Africa transactions. AAR failed to properly record 
the true nature of these payments and falsely recorded the payments as legitimate expenses or 
contra revenue. Therefore, AAR violated Exchange Act Section 13(b)(2)(A). 
 
47.  Section 13(b)(2)(B) of the Exchange Act, part of the internal accounting controls 
of the Exchange Act, requires, in relevant part, that issuers that have a class of securities registered 
pursuant to Section 12 of the Exchange Act or reporting obligations pursuant to Section 15(d) of 
the Exchange Act devise and maintain a system of internal accounting controls sufficient to 
provide reasonable assurances that (i) transactions are executed in accordance with management’s 
general or specific authorization; (ii) transactions are recorded as necessary (I) to permit 
preparation of financial statements in conformity with generally accepted accounting principles or 
any other criteria applicable to such statements, and (II) to maintain accountability for assets; (iii) 
access to assets is permitted only in accordance with management’s general or specific 
authorization; and (iv) the recorded accountability for assets is compared with the existing assets at 
reasonable intervals and appropriate action is taken with respect to any differences. 15 U.S.C. § 
78m(b)(2)(B). As described above, AAR failed to devise and maintain a system of internal 
accounting controls sufficient to provide reasonable assurances that transactions were executed and 
access to assets was permitted only in accordance with management’s general or specific 
authorization. Specifically, AAR had insufficient internal accounting controls over vendor 
management and accounts payable to provide reasonable assurances that the AAR personnel were 
adhering to AAR’s Global Anti-Corruption Policy and procedures regarding the retention of and 
payments to agents. By this conduct, AAR violated Exchange Act Section 13(b)(2)(B).
 
 

 11 
DISGORGEMENT AND NON-IMPOSITION OF CIVIL PENALTIES 
 
48. The disgorgement and prejudgment interest ordered in Section IV below is 
consistent with equitable principles, does not exceed Respondent’s net profits from its violations, 
and returning the money to Respondent would be inconsistent with equitable principles. Therefore, 
in these circumstances, distributing disgorged funds to the US Treasury is the most equitable 
alternative. The disgorgement and prejudgment interest ordered in Section IV below shall be 
transferred to the general fund of the US Treasury, subject to Section 21F(g)(3) of the Exchange 
Act.   
 
49. Respondent acknowledges that the Commission is not imposing a civil penalty, 
based upon the imposition of a $26,363,029 criminal penalty as part of AAR’s related resolution 
with the US Department of Justice. 
 
COOPERATION AND REMEDIATION 
 
50. In determining to accept the Offer, the Commission considered that AAR reported 
its misconduct after learning of press reports of potential corruption in connection with this 
transaction in Nepal, implemented remedial measures, and cooperated with  the Commission 
staff.  
 
51. Respondent’s cooperation included, among other things, proactively preserving, 
imaging, and conducting forensic analysis of key electronic evidence, providing translations of 
certain relevant documents, making current and former employees available to the Commission 
staff (including witnesses located overseas), and timely and voluntarily providing the details of 
facts developed during its internal investigation, including the sharing of forensic accounting 
analysis, relevant emails and company documents, and information pertaining to current and 
former employees.  
 
52. Respondent’s remediation included separating from employees responsible for the 
misconduct or who inadequately responded to red flags, initiating improvements to its internal 
audit and compliance programs by enhancing its compliance resources and hiring personnel such 
as a new Chief Ethics and Compliance Officer, applying controls improvements to acquired 
entities, amending public bidding policies and implementing monitoring processes including a 
messaging application retention tool and periodic anti-corruption site reviews. Respondent also 
increased training on anti-bribery issues. Respondent has also undertaken an analysis of its 
compliance program and continues to make improvements utilizing anticorruption risk 
assessments, data analytics, internal audits, and internal accounting controls related to third-party 
management. 
 
IV. 
 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer.  
 

 12 
Accordingly, it is hereby ORDERED that:  
 
A.  Pursuant to Section 21C of the Exchange Act, Respondent AAR cease and desist 
from committing or causing any violations and any future violations of Sections 30A, 
13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act.  
 
B.  AAR shall, within 10 days of the entry of this Order, pay disgorgement of $23,451,100 
and prejudgment interest of $5,785,524 
to the Securities and Exchange Commission for transfer 
to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 
timely payment is not made, additional interest shall accrue pursuant to SEC Rule of Practice 
600. 
 
 
C. Payment must be made in one of the following ways:  
 
(1) AAR may transmit payment electronically to the Commission, which will 
provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) AAR may make direct payment from a bank account via Pay.gov through the 
SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) AAR may pay by certified check, bank cashier’s check, or United States 
postal money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:  
 
Enterprise Services Center  
Accounts Receivable Branch  
HQ Bldg., Room 181, AMZ-341  
6500 South MacArthur Boulevard  
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
AAR as Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to Charles E. Cain, Chief of the FCPA 
Unit, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
Washington, DC 20549-5631B. 
 
 By the Commission. 
 
 
Vanessa A. Countryman 
        Secretary 

UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101987 / December 19, 2024 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4550 / December 19, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22369 
 
 
In the Matter of 
 

AAR CORP., 
 
Respondent. 
 
 
 
 

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  

   
 

I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”) against AAR CORP. (“AAR” or “Respondent”).  

 
 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, Respondent admits the Commission’s jurisdiction over it and the 
subject matter of these proceedings, and consents to the entry of this Order Instituting Cease-and-
Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
 



 2 

III. 
 
 On the basis of this Order and Respondent’s Offer of Settlement, the Commission finds1 that:  
 

SUMMARY 
 

1. This matter concerns violations of the anti-bribery, books and records, and internal 
accounting controls provisions of the Foreign Corrupt Practices Act of 1977 (the “FCPA”) by AAR, 
a provider of aviation products and services, arising from two separate bribery schemes. One 
scheme was in connection with the sale of two Airbus A330 aircraft to Nepal Airlines Corporation 
(“Nepal Airlines”), a government-owned airline, and the second was in connection with the sale of 
aftermarket aviation services to SAA Technical (SOC) Ltd. (“South African Airways Technical”), 
a subsidiary of South African Airways (SOC) Ltd (“South African Airways”), a government-
owned airline. 
 

2.  The improper payments were in the form of sham commissions and fees payable to 
government officials through the use of a third-party agent and joint venture partner. The 
misconduct also involved a now-former high-level employee of an AAR subsidiary, Deepak 
Sharma. The payments were in violation of AAR policies and were falsely recorded on the 
company’s books and records as legitimate expenses. 

 
RESPONDENT 

 
3. AAR is a provider of aviation products and services. AAR and its wholly owned 

subsidiaries currently have approximately 5,700 employees and hold approximately $2.8 billion in 
total assets. AAR is incorporated in Delaware with its principal executive offices in Illinois. The 
company’s common stock is registered with the Commission pursuant to Section 12(b) of the 
Exchange Act, and it files periodic reports with the Commission pursuant to Section 13 of the 
Exchange Act. The company’s common stock trades on the New York Stock Exchange under the 
ticker symbol AIR.  
 

 
1   The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 
 



 3 

OTHER RELEVANT ENTITIES AND INDIVIDUALS 
 
4. Deepak Sharma (“Sharma”), age 46, was President of International Supply 

Chain for a wholly owned AAR subsidiary, from November 2015 until his suspension in April 
2019.  He resigned from AAR in September 2019. Sharma, a UK citizen residing in the UK. 
After starting at the AAR subsidiary, Sharma was the lead executive responsible for the Nepal 
Airlines transaction. During the relevant period, Sharma signed SOX sub-certifications as 
President of International Supply Chain. In August 2024, in connection with the Nepal Airlines 
scheme, Sharma pleaded guilty to a one-count criminal information filed in the US charging him 
with conspiracy to violate the anti-bribery provisions of the FCPA, in violation of 18 U.S.C. § 
371. 

 
5. Nepal Airlines is a state-owned airline and the flag carrier for the government of 

Nepal. It was founded in 1958 and is the oldest airline in the country. In 2015, it was looking to 
expand its international fleet through the purchase of two wide-body aircraft. 

 
6. Consortium Party A, a German corporation, was part of a consortium with an 

AAR subsidiary involved in bidding on the sale of two Airbus A330 aircraft to Nepal Airlines. It 
established a special purpose vehicle to facilitate the sale. 

 
7. Consortium Party B, a Portuguese charter airline, was part of a consortium with 

an AAR subsidiary involved in bidding on the sale of two Airbus A330 aircraft to Nepal Airlines. It 
had the right to purchase the two Airbus planes, which it assigned to a special purpose vehicle. 

 
8. Special Purpose Vehicle was a special purpose vehicle established by Consortium 

Party A for the purpose of facilitating the sale of two Airbus A330 aircraft to Nepal Airlines. 
 
9. Principal AB, a Nepalese national, controlled Third-Party Agent A and Third-Party 

Agent B.  In connection with the Nepal transaction, an AAR subsidiary, Consortium Party A , and 
Special Purpose Vehicle retained Principal AB.  
 

10. Third-Party Agent A, a Hong Kong corporation, was controlled by Principal AB 
and purportedly involved in the telecommunications business.  

 
11. Third-Party Agent B, a Dubai-based entity incorporated in the UAE, was formed 

and controlled by Principal AB as a successor entity to Third-Party Agent A.  
 
12. South African Airways is a South African government-owned airline. 
 
13. South African Airways Technical is a state-owned subsidiary of South African 

Airways that provides aircraft maintenance services to various commercial airlines. 
 



 4 

14. Joint Venture Party was formed in 2015 as a South African Broad-Based Black 
Economic Empowerment (“BBBEE”) entity. The principals of Joint Venture Party were Principal 
1, Principal 2, and two of Principal 2’s daughters. On January 4, 2022, after AAR had terminated 
the relationship with Joint Venture Party and South African Airways Technical, an investigative 
commission of the South African government found that Principal 1, Principal 2, and Joint Venture 
Party bribed government officials in connection with a transaction unrelated to AAR. That 
commission did not make findings of corruption as to AAR or its arrangement with Joint Venture 
Party but found that the award of the component tender to Joint Venture Party was unlawful and 
irregular. .   

 
FACTS 

 
Nepal Bribery Scheme 

 
15. From at least November 2015 through 2018, Sharma, a then senior executive at an 

AAR subsidiary, orchestrated and implemented a bribery scheme to win a contract for the sale to 
Nepal Airlines of two Airbus A330 aircraft valued at approximately $210 million. As part of the 
scheme, an AAR subsidiary retained Third-Party Agent A, whose role was to pay bribes to 
officials who had control over the Nepal Airlines contract. AAR terminated its relationship with 
Third-Party Agent A prior to the transaction closing, resulting in Sharma arranging to have 
Consortium Party A pay Third-Party Agent A and its successor entity, Third-Party Agent B, a 
success fee for winning the Nepal Airlines contract.  

 
16. In 2015, Sharma was hired as President of the International Supply Chain for an 

AAR subsidiary. At the time, Sharma suggested that he could help secure the Nepal Airlines 
opportunity. Upon arriving at AAR, Sharma pursued the opportunity as the lead employee 
responsible for winning the Nepal Airlines contract, reporting directly to an AAR executive. 
Sharma’s internal communications to AAR personnel suggested that the Nepal Airlines request 
for proposal (“RFP”) would be drafted to favor AAR. For example, on November 22, 2015, 
Sharma sent an internal email conveying that he had a “good meeting” with the “CEO of [Nepal] 
airlines” and that the RFP for the transaction would be written in favor of AAR. In a follow-up 
December internal email, Sharma forwarded email correspondence between himself and the Nepal 
Airlines’ Managing Director, adding that the Managing Director was “100% relying on us to bid 
and win this aircraft sales” contract. 

 



 5 

17.  Starting at least as early as December 2015, Sharma worked with Principal AB, a 
Nepalese individual who controlled Third-Party Agent A, and its successor entity, Third-Party 
Agent B, and with Nepalese officials to help AAR win the Nepal Airlines contract. In March, 
2016, Sharma secured, and shared internally at AAR, an unpublished draft of the RFP for AAR 
executives to “comment” on and “change any terms to suit AAR.” As a result, Sharma and others 
at AAR proposed changes to the draft RFP to benefit AAR in the bidding process. A few months 
later, Sharma emailed the Nepal Airlines’ Managing Director adding specifications to the RFP, and 
then forwarded this email internally, writing that the “way this RFP is going no one else will 
qualify to bid except AAR.” On September 26, 2016, the RFP was officially published. Upon 
publication, Sharma reported in an internal email that the RFP was “designed for us.”  

 
18. Soon after the RFP was published, Sharma discussed internally the need to engage 

Third-Party Agent A as an agent on the Nepal Airlines transaction. In doing so, Sharma noted that 
he would “pull all political strings in Nepal” and that setting up a foreign representative agreement 
(“FRA”) with Third-Party Agent A would help “lock . . . in” the Nepal Airlines transaction. Third-
Party Agent A, based in Hong Kong and purportedly a telecommunications business, was engaged 
by an AAR subsidiary despite red flags raised during due diligence including: (1) its lack of any 
aviation industry experience; (2) limited and vague descriptions of the services it would provide; 
(3) that two customer references provided by Third-Party Agent A involved sales of cellphones 
and electronics; and (4) a higher than normal commission rate.  

 
19. On November 1, 2016, Third-Party Agent A was officially engaged pursuant to the 

FRA. Under the FRA, Third-Party Agent A would receive a commission payment of 7% of the 
final sales price of the two aircraft, and the commission payment was estimated to be between $9.6 
and $14.6 million. An internal AAR PowerPoint noted the arrangement to be “necessary” for AAR 
to win the Nepal Airlines transaction. 

 
20. On November 8, 2016, an AAR subsidiary formed a consortium through a 

framework agreement with Consortium Party A and Consortium Party B (collectively the “AAR 
Consortium”) to submit a bid on the Nepal Airlines transaction. Under the initial structure, AAR 
would provide the aircraft, Consortium Party A would provide the financing, and Consortium Party 
B would provide services, spare parts, and tooling. Consortium Party B would also assign the right 
it held to purchase two A330 aircraft from Airbus to Special Purpose Vehicle, which would be 
created by Consortium Party A. To purchase the aircraft, Consortium Party A would use Special 
Purpose Vehicle to buy the two A330 aircraft from Airbus, and Special Purpose Vehicle would 
then sell the aircraft to AAR, which in turn would sell the aircraft to Nepal Airlines. AAR 
estimated that it would make between $8 million to $12 million from that transaction structure.  

 
21. On November 9, 2016, the AAR Consortium submitted its bid in response to the 

RFP. The cover letter for the bid was addressed to Nepal Airlines’ Managing Director from 
Sharma. The next day, Sharma texted an AAR executive “we got the Nepal deal.”   

 



 6 

22. On or around December 1, 2016, AAR executives learned from Sharma that money 
going to Third-Party Agent A would be used to make donations to political parties in Nepal as part 
of the Nepal Airlines transaction. On December 4, 2016, AAR received an anonymous email 
alleging bribery related to the Nepal Airlines transaction. As a result of learning from Sharma that 
Third-Party Agent A would be making these payments, AAR terminated Third-Party Agent A on 
December 9, 2016. On January 16, 2017, Nepal Airlines notified AAR that its board had approved 
the AAR Consortium’s bid. 

 
 
23. The transaction was restructured such that Special Purpose Vehicle would buy the 

two A330 aircraft from Airbus, but rather than selling them to AAR, Special Purpose Vehicle 
would sell the aircraft directly to Nepal Airlines, and, for negotiating the transaction, AAR would 
receive a $6 million commission (rather than the originally contemplated $9.6-14.6 million 
commission).  

 
24. As part of the termination of the FRA, the AAR subsidiary and Third-Party Agent 

A executed a termination and separate fee agreement that provided Third-Party Agent A with 
$250,000 as “full payment to” Third-Party Agent A “for its time and costs associated with its 
efforts relating to the sale of [the] aircraft” upon the delivery of the two aircraft to Nepal Airlines 
and after payment to the AAR subsidiary.  

 
25. Sharma subsequently put in place a May 2017 agreement between Third-Party 

Agent A and Consortium Party A pursuant to which Consortium Party A would pay Third-Party 
Agent A a commission of $4 million per aircraft ($8 million for the two aircraft). The agreement 
was backdated to October 7, 2016, to make it look like it was in place at the time the AAR 
Consortium placed its bid. A subsequent July 2017 agreement replaced Consortium Party A with 
Special Purpose Vehicle in Consortium Party A’s agreement with Third-Party Agent A, making 
Special Purpose Vehicle the entity responsible for paying the relevant sales commission to Third-
Party Agent A. 

 
26. However, when the Nepal Airlines transaction closed, Consortium Party A’s 

payments (through Special Purpose Vehicle) to Third-Party Agent A were blocked due to its 
financial institution’s “Know Your Customer” rules. This resulted in Sharma working with 
Principal AB to form a new company, Third-Party Agent B, to receive payments from Consortium 
Party A. Third-Party Agent B was incorporated in UAE (Dubai) on October 22, 2017, with 
Principal AB’s son as one of its two shareholders. Sharma then worked with Principal AB to assign 
to Third-Party Agent B Third-Party Agent A’s rights under the Special Purpose Vehicle/Third-
Party Agent A agreement. In 2018, AAR paid Third-Party Agent A the $250,000 commission via a 
wire transfer through at least one US correspondent bank and Consortium Party A/Special Purpose 
Vehicle paid Third-Party Agent B $2.6 million. In coordinating the payment to Third Party Agent 
A, Sharma communicated via email with AAR personnel located in the US. 

 



 7 

27. While the payment to Third-Party Agent A was part of the bribery scheme and the 
AAR subsidiary lacked documentary evidence reflecting any legitimate services actually 
performed by Third-Party Agent A, the $250,000 commission payment was recorded by the AAR 
subsidiary as a legitimate commission expense.  

 
28. AAR failed to devise and maintain internal accounting controls related to vendor 

management and accounts payable sufficient to provide reasonable assurances that AAR personnel 
were adhering to AAR’s Global Anti-Corruption Policy and its procedures regarding the retention 
of and payments to third-party agents. 

 
29.  As a result of this misconduct, AAR was unjustly enriched by $6,000,000. 

  
South Africa Bribery Scheme 

 
30. From January 2016 through February 2020, Joint Venture Party, AAR’s agent in 

South Africa, bribed South African government officials to obtain a contract for an AAR 
subsidiary to provide aftermarket aviation services to South African Airways Technical. The bribes 
were funded by money paid to Joint Venture Party from AAR as “success fee payments” and 
“commissions” that were falsely designated in AAR’s books and records as legitimate business 
expenses. Sharma facilitated these payments and Principal 1, a principal of Joint Venture Party, 
arranged for and invoiced the bribes, while his partner, Principal 2, paid them to the officials. 

 
31. Between 2011 and 2015, AAR had repeatedly tried unsuccessfully to enter South 

Africa’s aviation market. As a result, a now former AAR executive sought to cultivate 
relationships with South African officials, including South African Airways Technical’s 
Chairperson (Government Official 1) and South African Airways Technical’s Head of 
Procurement (Government Official 2).   
 

32. Following a failed AAR bid on a South African Airways Technical contract using 
a BBBEE2 partner AAR had selected, Government Official 2 advised the former AAR executive 
in an August 18, 2015 email that, “the selection [of a BBBEE partner] . . . should be a decision 
by both the parties; however, it seems that AAR is far ahead with this without [South African 
Airways Technical]’s involvement and input.  We believe that being a State-Owned Company 
[South African Airways Technical] is in the right position to drive the process.” Shortly 
thereafter, at a September 2015 dinner in South Africa, Government Official 1 introduced the 
former AAR executive to Principal 2, a principal of Joint Venture Party, which was an accredited 
BBBEE partner and an approved aviation services vendor for South African Airways and South 
African Airways Technical. On December 14, 2015, Joint Venture Party advised the former 
AAR executive that Joint Venture Party had a “special relationship” with South African Airways 
Technical. 

 

 
2   BBBEE is a policy of the South African government which aims to facilitate broader participation in 
the economy and viable economic empowerment by Black South Africans. It is intended to redress the 
inequalities and inequities created by Apartheid. 



 8 

33. Joint Venture Party described this “special” relationship to others at AAR, 
including Sharma, and on December 3, 2015, an AAR subsidiary entered into a Collaboration 
Agreement with Joint Venture Party. This initial agreement provided that Joint Venture Party 
would assist AAR in obtaining supply parts and services contracts in exchange for a 5% 
commission. The agreement contemplated the parties entering into an FRA, although that never 
occurred.  
 

34. On December 8, 2015, South African Airways Technical issued a request for bids 
for Component Support Services on its Boeing and Airbus fleets.   

 
35. In early January 2016, Joint Venture Party principals met with Government 

Official 2, and they openly discussed that Government Official 1, Government Official 2, and 
Government Official 3 (who was the acting Chief Executive Officer of South African Airways) 
would be sharing in the AAR contract proceeds along with Joint Venture Party. In return for this 
arrangement, Government Official 2 would ensure that AAR would be awarded the bid. 

 
36. In order for the contract to be economical for Joint Venture Party, Joint Venture 

Party required an upfront success fee from AAR. Sharma was kept informed of this scheme and 
clearly understood from Joint Venture Party that officials needed to be paid for AAR to win the 
South African Airways Technical bid. 

 
37. The bid was due on January 18, 2016, and a Joint Venture Agreement was 

executed between an AAR subsidiary and Joint Venture Party that day. However, to have 
sufficient funds to pay the bribes going forward, prior to executing the Agreement, and prior to 
submitting the bid, Joint Venture Party demanded a 3% success fee from AAR in addition to the 
agreed upon 5% commission on all gross revenues. Sharma countered with a 1.5% success fee 
made in equal payments at the end of every quarter from service commencement, for the first 
service year.  
 

38. As part of ensuring AAR would be awarded the contract, one of the government 
officials provided Joint Venture Party with guidance on how to best meet the specifics of the 
request for bids as well as confidential nonpublic information, including notes of competitors’ 
bids and pricing, which was shared with  Sharma through emails and texts sent to Sharma and 
others in the US, as well as to a principal of the Joint Venture Party who was, at times, in 
California. AAR knew it was receiving inside information to secure the award of the bid but did 
not inquire as to how that information was obtained. 

 
39. The AAR subsidiary was, in fact, awarded the contract, and in July 2016, the 

AAR subsidiary, Joint Venture Party, and South African Airways Technical signed a Component 
Support Agreement. After the contract was awarded, the incumbent service provider challenged 
the award. A South African court rejected this challenge.  Servicing pursuant to the Component 
Support Agreement began in October 2016.  
 

40. The AAR subsidiary paid Joint Venture Party $150,000 on September 1, 2016, as 
an advance on its first success fee payment, via a wire transfer through US bank accounts. This 



 9 

initial payment was split among Principal 1 of the Joint Venture Party, Principal 2 of the Joint 
Venture Party, Government Official 1, Government Official 2, and Government Official 3. The 
bribe payments continued throughout the course of the contract and were tracked by and 
accounted for monthly by Joint Venture Party. 

 
41. Throughout the contract term, Joint Venture Party continued to request more 

money from AAR and continued to seek its originally requested 3% success fee. While Sharma 
and a now former AAR executive together tried to find ways to increase Joint Venture Party’s 
compensation through a rate increase, the success fee itself was not changed. Moreover, by 
December 2019, South African Airways was in financial straits and could no longer assist in the 
funding of South African Airways Technical. Thereafter, South African Airways Technical 
suffered severe financial distress and was in turn unable to meet its payment obligations to AAR. 

 
42. When AAR asked Joint Venture Party to address reports of its potential corrupt 

conduct made in certain testimony before a public commission in South Africa, including an 
illicit payment made by Principal 2 to Government Official 2 in an unrelated, sham real estate 
transaction not involving AAR, Joint Venture Party tendered false documents to AAR. As a 
result, AAR terminated the Component Services Agreement and asked for an audit of Joint 
Venture Party, which Joint Venture Party declined. Shortly after February 14, 2020, AAR 
terminated the relationship with Joint Venture Party. In total, over the term of the Component 
Support Agreement with South African Airways Technical AAR paid $1.24 million in success 
fees and $4.16 million in commission payments to Joint Venture Party, for a total of $5.4 
million. 

 
43. As a result of this misconduct, AAR was unjustly enriched by $17,451,100.  
 

LEGAL STANDARDS AND VIOLATIONS 
 
44. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-

and-desist order upon any person who is violating, has violated, or is about to violate any provision 
of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was, 
or would be a cause of the violation, due to an act or omission the person knew or should have 
known would contribute to such violation. 

 
45. Section 30A(a) of the Exchange Act, an anti-bribery provision of the Exchange Act, 

provides, in relevant part, that it is unlawful for any issuer with a class of securities registered 
pursuant to Section 12 of the Exchange Act or which is required to file reports under Section 15(d) 
of the Exchange Act, or any employee or agent of such issuer, to make use of the mails or any 
means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, 
promise to pay, or authorization of the payment of any money, or offer, gift or promise to give 
anything of value to any foreign official for purposes of influencing any act or decision of such 
foreign official in his official capacity, or to any foreign political party or party official for 
purposes of influencing any act or decision of such party or party official in its official capacity, in 
order to assist such issuer in obtaining or retaining business for or with any person. 15 U.S.C. § 
78dd-1(a). As a result of improper payments made through an AAR subsidiary’s third-party agent 



 10 

and joint venture partner to foreign officials in Nepal and South Africa, AAR was able to obtain 
business from state-owned actors as described above. As a result of the conduct described above, 
AAR violated Exchange Act Section 30A(a). 

 
46. Section 13(b)(2)(A) of the Exchange Act, part of the books and records provisions 

of the FCPA, requires, in relevant part, that every issuer with a class of securities registered 
pursuant to Section 12 of the Exchange Act or which is required to file reports under Section 15(d) 
of the Exchange Act, to make and keep books, records, and accounts which, in reasonable detail, 
accurately and fairly reflect the transactions and disposition of the assets of the issuer. 15 U.S.C. § 
78m(b)(2)(A). As a result of the conduct described above, AAR’s books and records inaccurately 
characterized commission payments and success fees to the third-party agent and joint venture 
partner in connection with the Nepal and South Africa transactions. AAR failed to properly record 
the true nature of these payments and falsely recorded the payments as legitimate expenses or 
contra revenue. Therefore, AAR violated Exchange Act Section 13(b)(2)(A). 

 
47.  Section 13(b)(2)(B) of the Exchange Act, part of the internal accounting controls 

of the Exchange Act, requires, in relevant part, that issuers that have a class of securities registered 
pursuant to Section 12 of the Exchange Act or reporting obligations pursuant to Section 15(d) of 
the Exchange Act devise and maintain a system of internal accounting controls sufficient to 
provide reasonable assurances that (i) transactions are executed in accordance with management’s 
general or specific authorization; (ii) transactions are recorded as necessary (I) to permit 
preparation of financial statements in conformity with generally accepted accounting principles or 
any other criteria applicable to such statements, and (II) to maintain accountability for assets; (iii) 
access to assets is permitted only in accordance with management’s general or specific 
authorization; and (iv) the recorded accountability for assets is compared with the existing assets at 
reasonable intervals and appropriate action is taken with respect to any differences. 15 U.S.C. § 
78m(b)(2)(B). As described above, AAR failed to devise and maintain a system of internal 
accounting controls sufficient to provide reasonable assurances that transactions were executed and 
access to assets was permitted only in accordance with management’s general or specific 
authorization. Specifically, AAR had insufficient internal accounting controls over vendor 
management and accounts payable to provide reasonable assurances that the AAR personnel were 
adhering to AAR’s Global Anti-Corruption Policy and procedures regarding the retention of and 
payments to agents. By this conduct, AAR violated Exchange Act Section 13(b)(2)(B). 

 



 11 

DISGORGEMENT AND NON-IMPOSITION OF CIVIL PENALTIES 
 
48. The disgorgement and prejudgment interest ordered in Section IV below is 

consistent with equitable principles, does not exceed Respondent’s net profits from its violations, 
and returning the money to Respondent would be inconsistent with equitable principles. Therefore, 
in these circumstances, distributing disgorged funds to the US Treasury is the most equitable 
alternative. The disgorgement and prejudgment interest ordered in Section IV below shall be 
transferred to the general fund of the US Treasury, subject to Section 21F(g)(3) of the Exchange 
Act.   

 
49. Respondent acknowledges that the Commission is not imposing a civil penalty, 

based upon the imposition of a $26,363,029 criminal penalty as part of AAR’s related resolution 
with the US Department of Justice. 

 
COOPERATION AND REMEDIATION 

 
50. In determining to accept the Offer, the Commission considered that AAR reported 

its misconduct after learning of press reports of potential corruption in connection with this 
transaction in Nepal, implemented remedial measures, and cooperated with  the Commission 
staff.  

 
51. Respondent’s cooperation included, among other things, proactively preserving, 

imaging, and conducting forensic analysis of key electronic evidence, providing translations of 
certain relevant documents, making current and former employees available to the Commission 
staff (including witnesses located overseas), and timely and voluntarily providing the details of 
facts developed during its internal investigation, including the sharing of forensic accounting 
analysis, relevant emails and company documents, and information pertaining to current and 
former employees.  

 
52. Respondent’s remediation included separating from employees responsible for the 

misconduct or who inadequately responded to red flags, initiating improvements to its internal 
audit and compliance programs by enhancing its compliance resources and hiring personnel such 
as a new Chief Ethics and Compliance Officer, applying controls improvements to acquired 
entities, amending public bidding policies and implementing monitoring processes including a 
messaging application retention tool and periodic anti-corruption site reviews. Respondent also 
increased training on anti-bribery issues. Respondent has also undertaken an analysis of its 
compliance program and continues to make improvements utilizing anticorruption risk 
assessments, data analytics, internal audits, and internal accounting controls related to third-party 
management. 
 

IV. 
 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer.  
 



 12 

Accordingly, it is hereby ORDERED that:  
 
A.  Pursuant to Section 21C of the Exchange Act, Respondent AAR cease and desist 

from committing or causing any violations and any future violations of Sections 30A, 
13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act.  

 
B.  AAR shall, within 10 days of the entry of this Order, pay disgorgement of $23,451,100 
and prejudgment interest of $5,785,524 to the Securities and Exchange Commission for transfer 
to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 
timely payment is not made, additional interest shall accrue pursuant to SEC Rule of Practice 
600.  
 

C. Payment must be made in one of the following ways:  
 
(1) AAR may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) AAR may make direct payment from a bank account via Pay.gov through the 

SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) AAR may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:  

 
Enterprise Services Center  
Accounts Receivable Branch  
HQ Bldg., Room 181, AMZ-341  
6500 South MacArthur Boulevard  
Oklahoma City, OK 73169 

 
Payments by check or money order must be accompanied by a cover letter identifying 

AAR as Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to Charles E. Cain, Chief of the FCPA 
Unit, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
Washington, DC 20549-5631B. 
 
 By the Commission. 
 
 

Vanessa A. Countryman 
        Secretary 


	UNITED STATES OF AMERICA
	In the Matter of
	AAR CORP.,
	Respondent.
	RESPONDENT
	OTHER RELEVANT ENTITIES AND INDIVIDUALS