Today, John Deere, the agricultural equipment manufacturer, settled a Foreign Corrupt Practices Act (FCPA) investigation with the U.S. Securities and Exchange Commission (SEC) for almost ten million dollars. This isn’t the first time the company has faced SEC scrutiny and the fine comes on the lower end of the scale for large-cap companies.
Allegations Include Bribery of Non-Government Officials
Deere was fined arising from conduct stemming back as far as 2017. According to the SEC, to win tenders with government agencies a Deer subsidiary (Wirtgen Thailand) engaged in bribery through several different mechanisms, including entertaining government officials at massage parlors, hosting officials on elaborate sightseeing expeditions to Switzerland disguised as “factory visit” trips, and making cash payments to officials both directly and through the use of a third-party agent.
In one particularly revealing encounter, Wirtgen Thailand’s Managing Director texted the company’s Finance Manager “re DOH … will have candy money for you too, next week…. Re DRR I will have to discuss it again.” With respect to these cash bribes, the Managing Director instructed the Finance Manager to “Liaise with DOH…. Prepare 5 envelopes. And withdraw cash. You may take THB 100,000 first. For use on the delivery date.” The Finance Manager subsequently asked, “For the five envelopes should I go ahead and put [THB] 20,000 in each?” to which the Managing Director replied that he would do it himself.
While much of the bribery mirrors that from other enforcement actions one significant point of interest is that the settled charges also include “Commercial Bribery” of a customer. The description of these charges suggests that the people receiving bribes were not foreign officials, and they did not work for a government entity. It is unlikely that this conduct would satisfy the requirements of the FCPA’s anti-bribery provisions and this makes sense given that the charges Deere agreed to settle were violations of the books-and-records provisions of the FCPA. Nevertheless, the inclusion of bribery related misconduct that doesn’t involve foreign officials is rare in FCPA enforcement actions.
Remediation To Include A Podcast
To settle the charges John Deere will pay almost $10 million, of which $4.3 million is disgorgement of ill-gotten gains. Of note, the SEC gave remediation credit to the company for its improved compliance program which included a bi-monthly newsletter and a new podcast addressing compliance issues.
Not Deere’s First FCPA Investigation
In 2011, Deere was also investigated for bribery-related misconduct in Russia by the SEC. After a two-year investigation Deere disclosed that the SEC had closed its investigation without charges.
