Wednesday, February 14, 2007

Dow Settles FCPA Action

The Dow Chemical Company settled an SEC civil action regarding violations of the Foreign Corrupt Practices Act related to about $200,000 of payments to Indian officials by "a fifth-tier foreign subsidiary of Dow."  According to the SEC Litigation Release (here):

The complaint alleges that the Dow subsidiary, DE-Nocil Crop Protection Ltd. ("DE-Nocil"), headquartered in Mumbai, India, manufactured and marketed pesticides and other products primarily for use in the Indian agriculture industry. According to the complaint, beginning in 1996, DE-Nocil made approximately $39,700 in improper payments to an official in India's Central Insecticides Board to expedite the registration of three DE-Nocil products. Most of these payments were made through agreements with contractors which added fictitious charges on its bills, or issued false invoices, to DE-Nocil. The contractors then disbursed these extra funds, at DE-Nocil's direction, to the CIB official. The complaint also alleges that from 1996 and to 2001, DE-Nocil made $87,400 in improper payments to state officials in order to distribute and sell its products.

The complaint alleges that, in addition to these payments, DE-Nocil also made improper payments to Indian government officials consisting of an estimated $37,600 for gifts, travel, entertainment and other items; $19,000 to government business officials; $11,800 to sales tax officials; $3,700 to excise tax officials; and $1,500 to customs officials. In sum, over a six-year period, DE-Nocil distributed an estimated total of $200,000 in improper payments through federal and state channels. According to the complaint, none of these payments were accurately reflected in Dow's books and records, and Dow's system of internal accounting controls failed to prevent the payments.

Problems with bribery in countries with rapidly developing economies is nothing new, and Dow is the latest multinational to run afoul of the greater restrictions on illicit payments to win business.  Dow paid a $325,000 civil penalty and agreed to an administrative cease-and-desist order with the Commission. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/02/dow_settles_fcp.html

Civil Enforcement, FCPA, Settlement | Permalink

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