Panasonic agrees to pay $280 million corruption fine
Panasonic will pay $280 million to the US government to settle a federal corruption probe.
Panasonic Avionics Corporation, the Japanese tech giant’s in-flight entertainment division, retained consultants for improper purposes and concealed payments to third-party sales agents, in violation of the accounting provisions of the Foreign Corrupt Practices Act (FCPA).
According to the Securities and Exchange Commission (SEC), Panasonic Avionics Corporation hired a foreign official at a state-owned airline and paid them $875,000 over a six-year period to do “little to no work” while the company was negotiating two agreements with the airline valued at more than $700 million.
The SEC also found that Panasonic fraudulently overstated pre-tax and net income by backdating more than $82 million in revenue for the fiscal quarter ending June 30, 2012.
Panasonic Avionics agreed to pay a $137.4 million criminal penalty to resolve charges brought by the US Justice Department, while parent company Panasonic Corp. will pay $143 million to resolve charges from the SEC.
“When Panasonic Avionics Corporation caused its publicly-traded parent company to falsify its books and records, it distorted the information available to legitimate investors,” said Acting Assistant Attorney General Cronan.
“The Criminal Division will take all appropriate action to ensure that the investing public is able to trust the accuracy of the financial statements of companies that avail themselves of American securities exchanges.”
Antonia Chion, Associate Director of the SEC’s Enforcement Division, said:
“Investors rightfully expect that the companies they invest in will not engage in bribery or fraud,”
“Issuers must implement effective controls for the selection and engagement of consultants and agents to ensure compliance with anti-bribery statutes.”
Charles Cain, Chief of the Enforcement Division’s FCPA Unit, commented:
“Issuers need to ensure that their rules and controls address the specific bribery and corruption risks they face when operating in global markets with customers that are state-owned entities,”
“It is not enough for a company merely to set up policies and procedures that are not enforced or are easily circumvented by employees.”