The parent company of United Airlines will pay a USD 2.4 million fine after reviving a money-losing air route to please a now-disgraced New Jersey politician, US market regulators announced today.
The penalty by the Securities and Exchange Commission follows a USD 2.25 million fine imposed earlier this year by federal prosecutors in the bribery case.
United’s chief executive and two other senior officials stepped down in 2015 as the investigation unfolded revealing how the airline shareholders footed the bill to restore an unprofitable flight between Newark, New Jersey and Columbia, South Carolina, bowing to pressure from David Samson, the former chairman of the Port Authority of New York and New Jersey and former New Jersey attorney general.
Samson used a lobbyist to pressure United into reinstating the non-stop service even though the company had canceled the route in 2009 for lack of profit, officials said.
The airline lost nearly USD 1 million on the route which ran from September 2012 until April 2014.
As Port Authority chairman, Samson held sway over a proposed United hangar project at the Newark airport, a major hub, which the company believed would return USD 47.5 million in value to the airline as a result of more efficient routings.
“United initiated a money-losing flight solely to curry favor with a public official,” Andrew Calamari, head of the SEC’s New York Regional Office, said in a statement.
The flight was cancelled again shortly after Samson’s resignation in the unrelated New Jersey “Bridgegate” scandal in which state officials deliberately blocked traffic into New York to punish a political enemy of Governor Chris Christie, an unsuccessful presidential candidate, according to the SEC.
Samson, 77, whose legal team includes former Homeland Security secretary Michael Chertoff, pleaded guilty in July in a parallel criminal matter to a single count of bribery.
He is due to be sentenced next month in a New Jersey federal court.