The US Department of Justice (DoJ) has subpoenaed Saab North America, Inc. regarding Brazil’s acquisition of 36 Gripen fighters in 2014.
While previous probes by Brazilian and Swedish authorities cleared Saab of any misconduct, the new inquiry signals renewed interest in the $5.4bn defence deal under the FX-2 procurement programme.
This contract, valued at around $4.5bn, was part of the South American nation’s FX-2 programme, which lasted from 2008 until its conclusion in 2014. The programme led to Brazil purchasing 36 Gripen E/F fighter jets to modernise its air force.
GlobalData’s “Brazil Defense Market 2024-2029” report highlights that the deal included 28 single-seat and eight two-seater jets and related systems and equipment. The first Brazilian-made Gripen E flew on September 24, 2020.
Saab announced its intention to comply fully with the DoJ’s information request and cooperate with the ongoing investigation. However, the company emphasised that confidentiality obligations prevent further disclosure.
This latest inquiry follows earlier investigations by Brazilian and Swedish authorities, which were concluded without any findings of impropriety on Saab’s part. These investigations, however, did not fully quell the surrounding controversies regarding the procurement, which saw the Brazilian government narrow down its fighter options to Saab’s Gripen, Boeing‘s F/A-18 Super Hornet, and Dassault’s Rafale.
Renewed scrutiny on the FX-2 deal
The FX-2 procurement saw global defence companies vying for a foothold in Latin America’s largest economy. Saab’s proposal to share technology and commit to local production in Brazil appealed to the country’s domestic defence industry.
According to GlobalData’s “The Global Military Fixed Wing Aircraft Market 2024-2034,” SAAB AB is projected to be the second largest supplier of military fixed-wing aircraft in Latin America, with a 7.7% share from 2024 to 2034.
A spokesperson from Saab noted that “both Brazilian and Swedish authorities have previously investigated parts of the Brazilian fighter procurement process. These investigations were closed without indicating any wrongdoings by Saab.”
Impact on Saab
Such actions are typically aimed at ensuring compliance with US anti-corruption and business transparency laws, especially when there is suspicion of improper payments or influence in foreign procurement processes.
The company declined to further comment on the matter beyond its public statement. Given the sensitive nature of government contracts and the stringent legal frameworks under which they operate, this policy of limited communication is expected.
Saab has made strides in expanding its Gripen fighter jet programme globally. In October 2023, Saab delivered its first series-produced, Gripen E, to Sweden’s FMV. The company has also strengthened its international presence, securing a deal with Hungary for four additional Gripen C aircraft and extending the Czech Republic’s lease of 14 Gripen jets beyond 2027. Thailand further signalled its preference for Saab’s Gripen over Lockheed Martin‘s F-16, though a formal contract still needs to be signed.
Saab reported strong financial results for Q2 2024, with a record order intake of Skr40bn ($3.7bn), marking the second-highest quarter in its history. The company saw a 22% increase in sales, reaching $1.4bn, and a 25% rise in earnings before interest and taxes (EBIT) to $125m, reflecting improved profitability. Net income grew by 27% to $95m, while earnings per share increased to $0.17.
