No Sex Please, We’re the SEC
Earlier this month, Deere & Company agreed with the SEC to disgorge about $4.3 million in profits and pay roughly $5.4 million in fines in connection with bribes that its Thai subsidiary paid between 2017 and 2020. Recipients included officials from the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads, as well as a private-sector company.
Thai officials appear to have not been aware of the actions until after the settlement was announced.
Unfortunately, the SEC’s enforcement order omits key facts that might help practitioners gain a better understanding of enforcement priorities. Namely, it doesn’t include revenue and profit details of certain contracts, leaving the reader to guess how each corrupt tender was accounted for in the final settlement figures.
As a result, it is not possible to confirm whether the SEC imposed any penalties at all for the commercial bribes*(though it certainly implies that it did). In its enforcement against Albemarle last year, the SEC called out commercial bribes, but imposed no actual penalty.
It even plays coy, dropping hints about the details of “massage parlor visits,” but failing to allege that sexual services may have been provided.
While the dollar values of those visits are low compared to the subsidiary’s other bribes, the especially harmful nature of sex work raises legitimate investor questions about governance and culture. This remains a question mark for the agency that fined a mutual fund manager $8 million when its employees received lavish hospitality, including a bachelor party with escorts, but let the company that provided the escorts pay $2.5 million less in fines.
The SEC order seems especially tight-lipped when it comes to details about deals with the Royal Thai Air Force. Thailand is currently mulling over Swedish and U.S. options in buying a dozen fighter jets, worth billions, by 2034.
*While the FCPA’s anti-bribery provisions only cover improper payments made to foreign government officials (and not commercial bribes in the private sector), the law also includes provisions relating to the accuracy of books and records, and sufficiency of internal controls, that have been used in enforcements that involve US domestic officials, or that have nothing to do with any kind of bribery at all.
FCPA Compliance Consultant, TRACE
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