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CONTINGENCIES | 12 Months Ended
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Dec. 31, 2018
Disclosure of contingent liabilities [abstract] |
CONTINGENCIES | NOTE 31 – CONTINGENCIES
| I. | Lawsuits
| 1) | Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
Tam Viagens S.A. |  | Fazenda Pública do Município de São Paulo. |  | 1004194-37.2018.8.26.0053 |  | This is a voidance action appealing the charges for violations and fines (67.168.795 / 67.168.833 / 67.168.884 / 67.168.906 / 67.168.914 / 67.168.965). We are arguing that numbers are missing from the ISS calculation base since the company supposedly made improper deductions. |  | The lawsuit was assigned on January 31, 2018. That same day, a decision was rendered suspending the charges without any bond. We are waiting for the deadline for the municipality to appeal to expire. The municipality filed an appeal against this decision on April 30, 2018, that is pending a decision. The voidance action is now in the evidentiary period. |  | 85,883
| 2) | Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
LATAM Airlines Group S.A. y Lan Cargo S.A. |  | European Commission. |  | - |  | Investigation of alleged infringements to free competition of cargo airlines, especially fuel surcharge. On December 26th , 2007, the General Directorate for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the instruction process against twenty five cargo airlines, including Lan Cargo S.A., for alleged breaches of competition in the air cargo market in Europe, especially the alleged fixed fuel surcharge and freight. |  | On April 14th, 2008, the notification of the European Commission was replied. The appeal was filed on January 24, 2011. On May 11, 2015, we attended a hearing at which we petitioned for the vacation of the Decision based on discrepancies in the Decision between the operating section, which mentions four infringements (depending on the routes involved) but refers to Lan in only one of those four routes; and the ruling section (which mentions one single conjoint infraction). On November 9th, 2010, the General Directorate for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the imposition of a fine in the amount of THUS$ 9,402 (8.220.000 Euros) This fine is being appealed by Lan Cargo S.A. and LATAM Airlines Group S.A. On December 16, 2015, the European Court of Justice revoked the Commission’s decision because of discrepancies. The European Commission did not appeal the decision, but presented a new one on March 17, 2017 reiterating the imposition of the same fine on the eleven original airlines. The fine totals 776,465,000 Euros. It imposed the same fine as before on Lan Cargo and its parent, LATAM Airlines Group S.A., totaling 8.2 million Euros. On May 31, 2017 Lan Cargo S.A. and LATAM Airlines Group S.A. filed a petition with the General Court of the European Union seeking vacation of this decision. We presented our defense in December 2017. LATAM AIRLINES GROUP S.A. expects that the Court of the European Union will reduce this fine. |  | 9,402
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
Lan Cargo S.A. y LATAM Airlines Group S.A. |  | In the High Court of Justice Chancery División (England) Ovre Romerike District Court (Norway) y Directie Juridische Zaken Afdeling Ceveil Recht (Netherlands) , Cologne Regional Court (Landgerich Köln Germany). |  | - |  | Lawsuits filed against European airlines by users of freight services in private lawsuits as a result of the investigation into alleged breaches of competition of cargo airlines, especially fuel surcharge. Lan Cargo S.A. and LATAM Airlines Group S.A., have been sued in court proceedings directly and/or in third party, based in England, Norway, the Netherlands and Germany. |  | Cases are in the uncovering evidence stage. In the case in England, mediation was held with nearly all the airlines involved in the aim of attempting to reach an agreement. It began in September, and LATAM Airlines Group S.A. reached an agreement for approximately GBP 636,000. A settlement was signed in December 2018 and payment was made in January 2019. This concluded the claim for all class-action plaintiffs except one, with whom negotiations continue. The amount is undetermined, but small. |  | -0-
Aerolinhas Brasileiras S.A. |  | Federal Justice. |  | 0008285-53.2015.403.6105 |  | An action seeking to quash a decision and petioning for early protection in order to obgain a revocation of the penalty imposed by the Brazilian Competition Authority (CADE) in the investigation of cargo airlines alleged fair trade violations, in particular the fuel surcharge. |  | This action was filed by presenting a guaranty – policy – in order to suspend the effects of the CADE’s decision regarding the payment of the following fines: (i) ABSA:ThUS$10,479; (ii) Norberto Jochmann: ThUS$201; (iii) Hernan Merino: ThUS$ 102; (iv) Felipe Meyer :ThUS$ 102. The action also deals with the affirmative obligation required by the CADE consisting of the duty to publish the condemnation in a widely circulating newspaper. This obligation had also been stayed by the court of federal justice in this process. Awaiting CADE’s statement. ABSA began a judicial review in search of an additional reduction in the fine amount. In December 2018, the Federal Court Judge ruled against ABSA, indicating that it will not apply an additional reduction to the fine imposed. We are now awaiting publication of the Judge’s ruling to file our appeal against it. |  | 10,541
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
Aerolinhas Brasileiras S.A. |  | Federal Justice. |  | 0001872-58.2014.4.03.6105 |  | An annulment action with a motion for preliminary injunction, was filed on 28/02/2014, in order to cancel tax debts of PIS, CONFINS, IPI and II, connected with the administrative process 10831.005704/2006.43. |  | We have been waiting since August 21, 2015 for a statement by Serasa on TAM’s letter of indemnity and a statement by the Union. The statement was authenticated on January 29, 2016. A petition on evidence and replications were filed on June 20, 2016. A new insurance policy was submitted on March 3, 2016 with the change to the guarantee requested by PGFN, which was declared on June 3, 2016. A decision is pending. |  | 14,083
Tam Linhas Aéreas S.A. |  | Department of Federal Revenue of Brazil |  | 19515.720476/2015-83 |  | Alleged irregularities in the SAT payments for the periods 01/2011 to 12/2012 |  | The lawsuit was converted into a measure in January 2018. A statement will be made after the prosecutor’s measure has concluded. The Brazilian Administrative Council of Tax Appeals (CARF) issued a decision in favor of the Company on September 22, 2018. We are currently expecting that the Ministry of Finance of Brazil will appea. |  | 59,317
Tam Linhas Aéreas S.A. |  | Court of the Second Region. |  | 2001.51.01.012530-0 |  | Ordinary judicial action brought for the purpose of declaring the nonexistence of legal relationship obligating the company to collect the Air Fund. |  | Unfavorable court decision in first instance. Currently expecting the ruling on the appeal filed by the company. In order to suspend chargeability of Tax Credit a Guaranty Deposit to the Court was delivered for ThUS$106. The court decision requesting that the Expert make all clarifications requested by the parties in a period of 30 days was published on March 29, 2016. The plaintiffs’ submitted a petition on June 21, 2016 requesting acceptance of the opinion of their consultant and an urgent ruling on the dispute. No amount additional to the deposit that has already been made is required if this case is lost. |  | 88,421
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
Tam Linhas Aéreas S.A. |  | Internal Revenue Service of Brazil. |  | 10880.725950/2011-05 |  | Compensation credits of the Social Integration Program (PIS) and Contribution for Social Security Financing (COFINS) Declared on DCOMPs. |  | The objection (manifestação de inconformidade) filed by the company was rejected, which is why the voluntary appeal was filed. The case was assigned to the 1st Ordinary Group of Brazil’s Administrative Council of Tax Appeals (CARF) on June 8, 2015. TAM’s appeal was included in the CARF session held August 25, 2016. An agreement that converted the proceedings into a formal case was published on October 7, 2016. |  | 57,287
Aerovías de Integración Regional, AIRES S.A. |  | United States Court of Appeals for the Eleventh Circuit, Florida, U.S.A. |  | 2013-20319 CA 01 |  | The July 30th , 2012 Aerovías de Integración Recional, Aires S.A. ( LATAM AIRLINES COLOMBIA) initiated a legal process in Colombia against Regional One INC and Volvo Aero Services LLC, to declare that these companies are civilly liable for moral and material damages caused to LATAM AIRLINES COLOMBIA arising from breach of contractual obligations of the aircraft HK-4107. The June 20th , 2013 AIRES SA And / Or LATAM AIRLINES COLOMBIA was notified of the lawsuit filed in U.S. for Regional One INC and Dash 224 LLC for damages caused by the aircraft HK-4107 arguing failure of LATAM AIRLINES COLOMBIA customs duty to obtain import declaration when the aircraft in April 2010 entered Colombia for maintenance required by Regional One. |  | This case is being heard by the 45th Civil Court of the Bogota Circuit in Colombia. Statements were taken from witnesses presented by REGIONAL ONE and VAS on February 12, 2018. The court received the expert opinions requested by REGIONAL ONE and VAS and given their petition, it asked the experts to expand upon their opinions. It also changed the experts requested by LATAM AIRLINES COLOMBIA. . The case was brought before the Court on September 10, 2018 and these rulings are pending processing so that a new hearing can be scheduled. On October 31, 2018, the judge postponed the deadline for the parties to answer the objection because of a serious error brought to light by VAS regarding the translation submitted by the expert. On March 26, 2014, the Federal Court in the State of Florida, USA, approved the petition by LATAM Airlines Colombia to suspend the case in the United States until the lawsuit under way in |  | 12,443
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
Aerovías de Integración Regional, AIRES S.A. |  | United States Court of Appeals for the Eleventh Circuit, Florida, U.S.A. |  | 2013-20319 CA 01 (Continuation) |  |  |  | Colombia was decided. The U.S. judge also closed the case administratively. Based on the petition by Regional One, the Federal Court in the State of Florida, USA, lifted the suspension of the case on July 11, 2018 and returned the case to the State Court. At the same time, VAS filed suit against LATAM AIRLINES COLOMBIA at the end of May 2018 seeking an indemnity because of the lawsuit by Regional One against VAS due to contract default. According to the requirements for civil suits in Florida, VAS has only claimed damages from LATAM AIRLINES COLOMBIA totaling more than US$15,000. The VAS lawsuit and Regional One lawsuit have been consolidated before the same State Court, which has set the trial by jury for September 19, 2019. A reconciliation hearing was held on December 10, 2018 that was attended by all parties, but no agreement was reached. The claim is continuing forward. It is possible that later on, the amount petitioned in the case may vary. Any change will be reported in due course. In the meantime, the State Court has yet to render a decision on the motions by LATAM Airlines Colombia to dismiss both the Regional One and VAS claims because they have no legal basis. |  |
Tam Linhas Aéreas S.A. |  | Internal Revenue Service of Brazil |  | 10880.722.355/2014-52 |  | On August 19th, 2014 the Federal Tax Service issued a notice of violation stating that compensation credits Program (PIS) and the Contribution for the Financing of Social Security COFINS by TAM are not directly related to the activity of air transport. |  | An administrative objection was filed on September 17th, 2014. A first-instance ruling was rendered on June 1, 2016 that was partially favorable. The separate fine was revoked. A voluntary appeal was filed on June 30, 2016, which is pending a decision by CARF. On January 9, 2016, the case was referred to the Second Division, Fourth Chamber, of the Third Section of the Administrative Council of Tax Appeals (CARF). |  | 65,914
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
TAM Linhas Aéreas S.A. |  | Sao Paulo Labor Court, Sao Paulo |  | 1001531-73.2016.5.02.0710 |  | The Ministry of Labor filed an action seeking that the company adapt the ergonomics and comfort of seats. |  | In August 2016, the Ministry of Labor filed a new lawsuit before the competent Labor Court in Sao Paulo, in the same terms as case 0000009-45.2016.5.02.090, as previously reported, the hearing date is set for October 22, 2018. |  | 16,575
LATAM Airlines Group S.A. |  | 22° Civil Court of Santiago |  | C-29.945-2016 |  | The Company received notice of a civil liability claim by Inversiones Ranco Tres S.A. on January 18, 2017. It is represented by Mr. Jorge Enrique Said Yarur. It was filed against LATAM Airlines Group S.A. for an alleged contractual default by the Company and against Ramon Eblen Kadiz, Jorge Awad Mehech, Juan Jose Cueto Plaza, Enrique Cueto Plaza and Ignacio Cueto Plaza, directors and officers, for alleged breaches of their duties. In the case of Juan Jose Cueto Plaza, Enrique Cueto Plaza and Ignacio Cueto Plaza, it alleges a breach, as controllers of the Company, of their duties under the incorporation agreement. LATAM has retained legal counsel specializing in this area to defend it. |  | The claim was answered on March 22, 2017 and the plaintiff filed its replication on April 4, 2017. LATAM filed its rejoinder on April 13, 2017, which concluded the argument stage of the lawsuit. A reconciliation hearing was held on May 2, 2017, but the parties did not reach an agreement. The Court issued the evidentiary decree on May 12, 2017. We filed a petition for reconsideration because we disagreed with certain points of evidence. That petition was partially sustained by the Court on June 27, 2017. The evidentiary stage commenced and then concluded on July 20, 2017. Observations to the evidence must now be presented. That period expires August 1, 2017. We filed our observations to the evidence on August 1, 2017. We were served the decision on December 13, 2017 that dismissed the claim since LATAM was in no way liable. The plaintiff filed an appeal on December 26, 2017. We are currently waiting for the case to be heard by the Court of Appeals. |  | 19,080
TAM Linhas Aéreas S.A. |  | 10th Jurisdiction of Federal Tax Enforcement of Sao Paulo |  | 0061196-68.2016.4.03.6182 |  | Tax Enforcement Lien No. 0020869-47.2017.4.03.6182 on Profit-Based Social Contributions from 2004 to 2007. |  | This tax enforcement was referred to the 10th Federal Jurisdiction on February 16, 2017. A petition reporting our request to submit collateral was recorded on April 18, 2017. At this time, the period is pending for the plaintiff to respond to our petition. The bond was replaced. |  | 39,222
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
TAM Linhas Aéreas S.A. |  | Federal Revenue Bureau |  | 10880.900360/2017-55 |  | A claim regarding the negative Company Income Tax (IRPJ) balance. Appraisals of compensation that were not accepted. |  | The case was referred to the National Claims Management Center of the Federal Revenue Bureau for Sao Paulo on May 11, 2017. The administrative case was closed in favor of the company and its right to a credit was recognized on June 15, 2018. |  | -0-
TAM Linhas Aéreas S.A. |  | Internal Revenue Service of Brazil |  | 16643.000085/2009-47 |  | Notice of claim to recover income taxes and social contributions paid on the basis of net profits (SCL) according to the royalty expenses and use of the TAM trademark. |  | Before the Internal Revenue Service of Brazil. A service of process is expected in the lawsuit on admissibility of the special appeal, filed by the General Counsel of the National Treasury, as well as notification of the decision rendered by the Administrative Council of Tax Appeals (CARF). The decision was made to file a lawsuit on December 5, 2017. |  | 15,590
TAM Linhas Aéreas S.A. |  | Internal Revenue Service of Brazil |  | 10831.012344/2005-55 |  | Notice of an infringement filed by the Company to request the import tax (II), the Social Integration Program (PIS) of the Social Security Funding Contribution (COFINS) as a result of an unidentified international cargo loss. |  | Before the Internal Revenue Service of Brazil. The administrative decision was against the company. The matter is pending a decision by the CARF. |  | 15,649
TAM Linhas Aéreas S.A. |  | DERAT SPO (Delegacía de Receita Federal) |  | 13808.005459/2001-45 |  | Collection of the Social Security Funding Contribution (COFINS) based on gross revenue of the company in the period 1999-2000. |  | The decision on collection was pending through June 2, 2010. |  | 23,720
TAM Linhas Aéreas S.A. |  | Federal Revenue Bureau |  | 10880.938.664/2016-12 |  | An administrative lawsuit about compensation not being proportional to the negative corporate income tax balance. |  | A decision is pending by CARF on the appeal. The Company’s right to its credit was recognized on November 21, 2018, which closed the administrative process in its favor. |  | -0-
TAM Linhas Aéreas S.A. |  | Delegacía de Receita Federal |  | 10611.720630/2017-16 |  | This is an administrative claim about a fine for the incorrectness of an import declaration (new lawsuit). |  | The administrative defensive arguments were presented September 28, 2017. A ruling on the defense is currently pending in this lawsuit. |  | 20,155
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
TAM Linhas Aéreas S.A |  | Delegacía de Receita Federal |  | 10611.720852/2016-58 |  | An improper charge of the Contribution for the Financing of Social Security (COFINS) on an import (new lawsuit). |  | We are currently awaiting a decision. There is no predictable decision date because it depends on the court of the government agency. |  | 14,501
TAM Linhas Aéreas S.A |  | Delegacía de Receita Federal |  | 16692.721.933/2017-80 |  | The Internal Revenue Service of Brazil issued a notice of violation because TAM applied for credits offsetting the contributions for the Social Integration Program (PIS) and the Social Security Funding Contribution (COFINS) that do not bear a direct relationship to air transport. |  | We are awaiting the presentation of an administrative defense. An administrative defense was presented on May 29, 2018. |  | 30,954
SNEA (Sindicato Nacional das empresas aeroviárias) |  | União Federal |  | 0012177-54.2016.4.01.3400 |  | A claim against the 72% increase in airport control fees (TAT-ADR) and approach control fees (TAT-APP) charged by the Airspace Control Department (“DECEA”). |  | A decision is now pending on the appeal presented by SNEA. |  | 42,423
TAM Linhas Aéreas S/A |  | União Federal |  | 2001.51.01.020420-0 |  | TAM and other airlines filed a recourse claim seeking a finding that there is no legal or tax basis to be released from collecting the Additional Airport Fee (“ATAERO”). |  | A decision by the superior court is pending. The amount is indeterminate because even though TAM is the plaintiff, if the ruling is against it, it could be ordered by the trial judge to pay certain fees |  | -0-
TAM Linhas Aéreas S/A |  | Delegacia da Receita Federa |  | 10880-900.424/2018-07 |  | This is a claim for a negative Legal Entity Income Tax (IRPJ) balance for the 2014 calendar year (2015 fiscal year) because set-offs were not allowed. |  | The administrative defensive arguments were presented March 19, 2018. An administrative decision is now pending. |  | 16,959
TAM linhas Aérea S/A |  | International Centre for dispute resolution (“ICDR”) |  | 01-18-0000-6332 |  | Arbitration filed by Airbus S.A.S., Airbus North America Customer Services, Inc. and Allianz Corporate & Specialty SE (France) against AIG Europe Limited (“AIG”), TAM S.A. (“TSA”) and TAM Linhas Aéreas S.A. (“TLA”). In 2008, the parties exchanged draft agreements on sharing the costs of any indemnity for certain claims related to the Flight JJ3054 accident, but they did not reach an agreement, so the draft was never finalized or executed. Despite this, Airbus and its insured filed a formal arbitration |  | On January 31, 2018, Airbus S.A.S., Airbus North America Customer Services, Inc. and Allianz Corporate & Specialty SE (France) filed an arbitration claim with the International Centre for Dispute Resolution against AIG Europe Limited (“AIG”), TAM S.A. (“TSA”) and TAM Linhas Aéreas S.A. (“TLA”) seeking a decision on the validity of a shared-defense agreement that had been discussed but never finalized or executed by the parties. The plaintiffs allege that the parties exchanged enough |  | 12,200
Company |  | Court |  | Case Number |  | Origin |  | Stage of trial |  | Amounts Committed (*)
|  |  |  |  |  |  |  |  |  | ThUS$
TAM Linhas Aéreas S.A |  | International Centre for dispute resolution (“ICDR”) |  | 01-18-0000-6332 (Continuation) |  | claim and served AIG, TSA and TLA as defendants, seeking a decision on the validity of the agreement as well as a damage indemnity to Airbus because it could not share its defense with TAM. TAM has retained legal counsel in Switzerland, Brazil and the United States to handle this claim. |  | correspondence and drafts to reflect the terms of a contract. Based on this alleged contract, they are demanding that TAM reimburse Airbus a sum of approximately ThUS$9.2 for settlement costs and ThUS$3 for legal fees, in addition to interest and any other amount decided by the Arbitrator On October 8, 2018, the plaintiffs filed a formal complaint that contained declarations by their supporting experts. On November 7, 2018, the Arbitrator issued a procedural ruling dividing the jurisdiction phase from the grounds-for-arbitration phase, thus expressing his agreement with the arguments by TSA and TLA as well as AIG. After a petition agreed by all parties, the Arbitrator postponed the deadline of December 14, 2018 while the parties held reconciliation negotiations. Finally, in December 2018, the parties agreed to hold a meeting to discuss a potential settlement that resulted in an agreement whereby Allianz Corporate & Speciality SE will pay AIG US$95 million toward the loss already settled by AIG for the accident. In exchange, all lawsuits and arbitration claims will be withdrawn at no additional cost to LATAM. The insurance companies are now in the process of obtaining the approvals required from the signatories of the agreement and the case is expected to be closed in the first half of 2019. The arbitration is temporarily on hold until the agreement is concluded. |  |
TAM Linhas Aéreas S/A |  | Delegacía de Receita Federal |  | 19515-720.823/2018-11 |  | An administrative claim to collect alleged differences in SAT payments for the periods 11/2013 to 12/2017. |  | A defense was presented on November 28, 2018. We are now awaiting the administrative ruling. |  | 118,558
| - | In order to deal with any financial obligations arising from legal proceedings in effect at December 31, 2018, whether civil, tax, or labor, LATAM Airlines Group S.A. and Subsidiaries, has made provisions, which are included in Other non-current provisions that are disclosed in Note 21.
| - | The Company has not disclosed the individual probability of success for each contingency in order to not negatively affect its outcome.
| (*) | The Company has reported the amounts involved only for the lawsuits for which a reliable estimation can be made of the financial impacts and of the possibility of any recovery, pursuant to Paragraph 86 of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
| II. | Governmental Investigations.
| 1) | On July 25, 2016, LATAM reached agreements with the U.S. Department of Justice (“DOJ”) and the U.S. Securities and Exchange Commission (“SEC”) regarding the investigation of payments for US$1,150,000 by Lan Airlines S.A. in 2006-2007 to a consultant advising it in the resolution of labor matters in Argentina.
The purpose of the investigation was to determine whether these payments violated the U.S. Foreign Corrupt Practices Act (“FCPA”) that: (i) forbids bribery of foreign government authorities in order to obtain a commercial advantage; and (ii) requires the companies that must abide by the FCPA to keep appropriate accounting records and implant an adequate internal control system. The FCPA is applicable to LATAM because of its ADR program in effect on the U.S. securities market. After an exhaustive investigation, the DOJ and SEC concluded that there was no violation of the bribery provisions of the FCPA, which is consistent with the results of LATAM’s internal investigation. However, the DOJ and SEC consider that LAN accounted for these payments incorrectly and, consequently, infringed the part of the FCPA requiring companies to keep accurate accounting records. These authorities also consider that LAN’s internal controls in 2006-2007 were weak, so LAN would have also violated the provisions in the FCPA requiring it to maintain an adequate internal control system. The agreements signed, included the following:
| (a) | The agreement with the DOJ involves: (i) entering into a Deferred Prosecution Agreement (“DPA”), which is a public contract under which the DOJ files public charges alleging an infringement of the FCPA accounting regulations. LATAM is not obligated to answer these charges, the DOJ will not pursue them for a period of 3 years, and the DOJ will dismiss the charges after expiration of that 3-year period provided LATAM complies with all terms of the DPA. In exchange, LATAM must admit to the negotiated events described in the DPA and agree to pay the negotiated fine explained below and abide by other terms stipulated in the agreement; (ii) clauses in which LATAM admits that the payments to the consultant in Argentina were incorrectly accounted for and that at the time those payments were made (2006-2007), it did not have adequate internal controls in place; (iii) LATAM’s agreement to have an outside consultant monitor, evaluate and report to the DOJ on the effectiveness of LATAM’s compliance program for a period of 27 months; and LATAM’s agreement to continue evaluating and reporting directly to the DOJ on the effectiveness of its compliance program for a period of 9 months after the consultant’s work concludes; and (iv) LATAM paid a fine of ThUS$12,750.
| (b) | The agreement with the SEC involves: (i) accepting a Cease and Desist Order, which is an administrative resolution of the SEC closing the investigation, in which LATAM will accept certain obligations and statements of fact that are described in the document; (ii) accepting the same obligations regarding the consultant mentioned above; and (iii) LATAM paid a fine of ThUS$6,744 and interest of ThUS$2,694.

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