Background

A U.S. consumer loan company has agreed to pay nearly $22 million to settle charges that it violated the Foreign Corrupt Practices Act in connection with the bribery of Mexican officials. However, the Department of Justice has declined criminal prosecution in this case.

According to information from the DOJ and the Securities and Exchange Commission, the company’s Mexican subsidiary paid about $4.1 million in bribes to Mexican union officials and state government officials to obtain and retain business. The SEC states that, among other things, the company (1) did not conduct formal due diligence on new vendors or have formal procedures or controls in place to approve new vendors, (2) did not identify the high risk of bribery and corruption in Mexico or implement sufficient internal accounting controls to address that risk, (3) failed to provide reasonable assurances that its subsidiary had implemented an FCPA policy and was adhering to it, and (4) lacked sufficient entity level controls over its subsidiary. In addition, company management “lacked the appropriate tone at the top regarding internal audit and compliance, thereby undermining the effectiveness of those functions.”

The company has agreed to pay a $2 million civil penalty to the SEC along with $17.8 million in disgorgement and $1.9 million in pre-judgment interest. The DOJ has declined to criminally prosecute the company in light of this penalty and a number of other factors, including the company’s prompt, voluntary self-disclosure; full and proactive cooperation; and full remediation, including adding FCPA training to its compliance program and discontinuing relationships with third parties in Mexico involved in the violations.

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