Fines Assessed for Bribery Schemes in Mainland China
10 October 2019
The U.S. Securities and Exchange Commission reports that a Canadian company and its former chief executive officer have agreed to pay more than US$4.1 million to resolve charges that they violated the Foreign Corrupt Practices Act by paying bribes to a foreign government official in mainland China. This amount includes US$2.55 million in disgorgement and pre-judgment interest, a US$1.5 million civil penalty against the company and a US$120,000 civil penalty against the former CEO. The SEC states that it considered remedial acts undertaken by the company concerning its anti-corruption and financial reporting compliance programmes as well as its co-operation with SEC staff.
According to an SEC order, the company engaged in a scheme to bribe a mainland Chinese government official to obtain business and a cash dividend payment by transferring shares of stock in its mainland Chinese joint venture to a mainland Chinese private equity fund in which the government official held a financial interest. The company concealed the identity of the equity fund in its public filings, as well as in its books and records, by falsely identifying a different entity as the counterparty to the transaction. The former CEO caused these violations by circumventing the company’s internal accounting controls and signing a false certification concerning the sufficiency of those controls.
The SEC also reports that a U.S. company has agreed to pay nearly US$10 million to resolve charges that it violated the FCPA by engaging in multiple bribery schemes in mainland China and Peru. This amount includes US$6.94 million in disgorgement, US$959,160 in pre-judgment interest and a US$2 million civil penalty. The company has also agreed to self-report on its compliance programme for one year.
The SEC states that the company’s Peruvian subsidiary repeatedly paid or promised bribes to Peruvian government officials to win sales contracts and avoid penalties and improperly attempted to influence the judicial outcome of a dispute with the Peruvian tax authority. The subsidiary also created false records to conceal transactions with a state-controlled Cuban telecommunications company that were subject to U.S. sanctions and export controls laws. Finally, the company’s mainland China-based subsidiary used sham sales agents to make and promise improper payments to employees of private and governmental customers to secure business.
- North America
- Mainland China
- Central & South America