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$9.5 Million Penalty for Bribery of Foreign Government Officials

Friday, April 10, 2015
Sandler, Travis & Rosenberg Trade Report

The Securities and Exchange Commission announced April 8 that an Oregon-based defense contractor will pay more than $9.5 million to settle charges that it violated the Foreign Corrupt Practices Act by financing personal travel for government officials in the Middle East who played key roles in decisions to purchase the company’s products.  The company, which self-reported the misconduct and cooperated with the SEC’s subsequent investigation, will also have to report its FCPA compliance efforts to the SEC for the next two years.

According to the SEC, the company had few internal controls over gifts and travel out of its foreign sales offices. The value of the gifts and the extent and nature of the travel at issue were falsely recorded in books and records as legitimate business expenses, and the company’s internal controls failed to catch the improper payments despite documentation suggesting that extravagant gifts and travel were being provided. The company allegedly earned more than $7 million in profits from sales influenced by the improper travel and gifts.

The SEC notes that to resolve these charges the company will pay $7.5 million in disgorgement, a $1 million penalty and $970,584 in pre-judgment interest.

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