Panasonic hit with $143m penalty over bribery and fraud charges
Japan-based multinational Panasonic is to pay more than $143m (£103m) to the Securities and Exchange Commission (SEC) to resolve bribery charges under the Foreign Corrupt Practices Act (FCPA) and accounting fraud violations involving its global avionics business
1 May 2018
According to the SEC, Panasonic’s US subsidiary, Panasonic Avionics Corporation, a provider of in-flight entertainment and communication systems, offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help Panasonic Avionics Corporation in obtaining and retaining business from the airline.
At the time it orchestrated the bribery scheme, Panasonic Avionics Corporation was negotiating two agreements with the airline valued at more than $700m. Panasonic Avionics Corporation ultimately retained the official and paid approximately $875,000 for a position that required little to no work, using an unrelated third-party vendor to conceal the payments.
The SEC also found that Panasonic fraudulently overstated pre-tax and net income by prematurely recognising more than $82m in revenue for the fiscal quarter ending June 30, 2012. The fraud was accomplished by Panasonic Avionics Corporation backdating an agreement with the airline and providing misleading information to Panasonic Avionics Corporation’s auditor.
In addition, the SEC said that Panasonic lacked sufficient internal accounting controls and failed to make and keep accurate books and records in connection with purported consultants retained by Panasonic Avionics Corporation, as well as sales agents used to solicit business from state-owned airlines and other customers throughout the Middle East and Asia.
Charles Cain, chief of the SEC’s enforcement division’s FCPA unit, said: ‘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.’
Panasonic consented to the SEC’s order finding that it had violated anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions. In a related matter, the US Department of Justice has announced that Panasonic Avionics Corporation will pay a criminal penalty of more than $137m as part of a deferred prosecution agreement related to causing books and records violations of the FCPA.
Report by Pat Sweet