Panasonic Fined by United States in Bribery Scheme
Panasonic Corp. will pay over $143M in disgorgement plus prejudgment interest to resolve a US Securities and Exchange Commission case involving a bribery scheme, accusing the company of accounting fraud violations and violating the Foreign Corrupt Practices Act (FCPA). Panasonic consented to the order, which finds that the Japan-based corporation violated the Securities Exchange Act of 1934. In a parallel criminal, the company will pay a $137M penalty in a deferred prosecution deal reached with the US Justice Department, which accused Panasonic of violating the FCPA over books and records.
The SEC contends that Panasonics Avionics Corp. a Panasonic subsidiary that offers in-flight entertainment and communications systems, offered a government official a consulting position at a state-owned airline to incentivize that individual into assisting the avionics company in garnering business. During the time of the scam, said the SEC’s order, the avionics company was negotiating two deals valued at over $700K with the airline.
The government official accepted the position, receiving about $875K despite not having to do much work. A third-party vendor made it possible to hide the payments. Meantime, according to the DOJ’s release, Panasonic Avionics purportedly made more than $92M from parts of the contract in which the consultant had “involvement or influence” while serving in the consultant position.
The SEC also is accusing Panasonic of acting fraudulently by allegedly overstating net and pre-tax income via the premature acknowledgement of over $82M in revenue during the fiscal quarter concluding at the end of June of 2012. Panasonics Avionics did this by backdating an agreement with the airline and giving the auditor information that was misleading.
Meantime, Panasonic is accused of not having adequate internal accounting controls and failing to ensure that it had the proper books and records pertaining to consultant and sales agents who garner business from state-owned airlines and others in the Middle East and Asia.
The DOJ’s release noted that Panasonic Avionics has admitted that its employees in Asia hid the purpose of some of its sales agents. Even after these relationships were “formally terminated,” company employees continued to work with them by rehiring them as another company’s sub-agents. In this manner, over $7M in payments to sub-agents were concealed. This led to the falsification of records, books, and accounts, which is an FCPA violation.
In another FCPA violation case, again involving the SEC and the DOJ, Dun & Bradstreet Corporation has arrived at a $9M settlement to resolve the allegations. While the $6M of disgorgement, more than $1.1M of prejudgment interest, and $2M civil penalty is part of the SEC case, the DOJ decided not to prosecute the business information provider in the wake of the FCPA Corporate Enforcement Policy.
According to the SEC, two Dun & Bradstreet subsidiaries in China issued illegal payments to government officials in that country in order to obtain proprietary data for the company’s’ global commercial database. The regulator felt that the company disregarded red flags. By settling the SEC case, Dun & Bradstreet is not denying or admitting to the regulator’s findings.
In the DOJ’s case, however, the government noted that it had decided not to prosecute because the company had identified the misconduct, engaged in voluntary self-disclosure, participated in a thorough probe, fully cooperated, and made compliance enhancements and full remediation. This included firing 11 people and disciplining others through lower bonuses, reduced salaries, and less than stellar performance reviews.
Read the SEC Order (PDF)
More Blog Posts from SSEK Law Firm:
SEC Proposes “Regulation Best Interests” that Would Prevent Brokers from Merely Calling Themselves Investment Adviser, Stockbroker Fraud Blog, April 20, 2018
Investment Adviser is Accused of “Ponzi-Like” Scam Involving 50 Investors, Including Friends and Family, Stockbroker Fraud Blog, April 18, 2018
SEC Accuses Broker of Giving Some Customers Preferential IPO Access in Exchange for Over $1M in Kickbacks, Stockbroker Fraud Blog, January 2, 2018
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