A Brazilian-based petrochemical maker that trades its stock in US markets has arrived at a $95M global settlement with the US Securities and Exchange Commission, the US Justice Department, and authorities in Switzerland and Brazil. Braskem SA is accused of violating the Foreign Corrupt Practices Act and generating fake books and records to hide millions of dollars in bribes that it allegedly paid government officials in Brazil for the purposes of either keeping or winning business.
Braskem is accused of making about $325M in profits because of these purported bribes that were made via intermediaries and off-book accounts run by its biggest shareholder. The SEC believes that the petrochemical manufacturer lacked the internal controls to stop it from executing these bribes, which allegedly occurred over eight years.
As part of the settlement, Braskem will pay $325M in disgorgement—$65M of that will go to the SEC and $260 will go to authorities in Brazil. Another $632M will go toward criminal penalties and fines. Braskem will have to work with an independent corporate monitor for a minimum of three years.
In another FCPA settlement, this one for $519M, Teva Pharmaceutical Industries Limited reached a deal with the SEC and the DOJ. The settlement resolves charges accusing it of paying government officials in Mexico, Ukraine, and Russia bribes to raise its market share, obtain drug purchases and prescription decisions in its favor, as well as get other approvals. As a result of the alleged violations, Teva purportedly made $214M in profits that were illicit.
The SEC said that the bribes were covered up as legitimate distributor payments. Of the $519M settlement, over $236M is disgorgement and interest to the SEC. $283M is a penalty and part of its deferred prosecution deal with the DOJ. Teva also must keep an independent corporate monitor in place for a minimum of three years.
Also settling FCPA charges against it, which were brought by the SEC and the DOJ, is General Cable Corporation. The Kentucky-based cable and wire manufacturer agreed to pay over $75M, in addition to $6.5M for accounting-related violations, to the regulator.
General Cable’s subsidiaries outside the US are accused of making improper payments to officials abroad over a 12-year period in order to keep or win business in Bangladesh, Angola, Egypt, China, Thailand, and Indonesia. The SEC attributes these bribes to the company’s purportedly weak internal controls not being able to identify improper inventory accounting at its subsidiary in Brazil. The regulator also believes that the company materially misstated financial statements from ’08 through 2012’s second quarter.
As part of that settlement, General Cable will pay the SEC $55 in disgorgement and interest and a nearly $20.5M penalty as part of its non-prosecution deal with the DOJ. The company settled with the SEC without denying or admitting to the findings. It is required to self-report its compliance efforts for three years.
Former General Cable senior VP Karl J. Zimmer, in charge of Angola sales, also agreed to pay the SEC a $20K penalty. However, he is not denying or admitting to the findings accusing him of knowing that he was getting around internal accounting controls and causing violations of the FCPA act by approving certain payments that were improper.
Wire and Cable Manufacturer Settles FCPA and Accounting Charges, SEC, December 29, 2016