UPDATE 1-Defense chief at Brazil's Embraer to step down next year -source

Brad Haynes
Thursday, 5 Dec 2013 | 10:18 AM ET

SAO PAULO, Dec 5 (Reuters) - The head of defense for Brazilian planemaker Embraer SA will leave the company at the beginning of next year after restructuring the division and raising compliance standards amid a bribery investigation, a source with direct knowledge of the decision told Reuters on Thursday.

Luiz Carlos Aguiar will step down after 10 years at Embraer, passing the reins at the defense division to Jackson Schneider, currently the head of human resources and institutional relations at Embraer, the source said on condition of anonymity.

Embraer declined to comment immediately on the matter.

Aguiar took over Embraer's defense unit at the beginning of 2011, more than a year after a $92 million deal with the armed forces of the Dominican Republic that triggered a corruption investigation by U.S. and Brazilian authorities.

The investigation, which the U.S. Department of Justice and the U.S. Securities and Exchange Commission launched under the Foreign Corrupt Practices Act in 2010, has expanded to involve other countries and prompted internal scrutiny of Embraer's sales practices.

Brazilian prosecutors have also begun a criminal probe of the executives involved. Aguiar has not been questioned in the investigation, according to the source, who declined to be named given the sensitivity of the matter.

Schneider joined Embraer from Mercedes Benz in 2011 after a career that started in public service. He has been president of national automakers' association Anfavea and a member of the finance ministry's taxpayer council.

He will take over the defense unit, Embraer's fastest-growing division, as the government is set to become an even bigger client for the world's No.3 commercial plane maker.

Next year, Brazil's Air Force is expected to sign a firm order for the first of Embraer's KC-390 military cargo jets after investing $2 billion on development of a transport plane to take on Lockheed Martin's Hercules airlifter.

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