Includes around $55 million to the SEC.
AB Wire
General Cable Corporation, a Kentucky-based manufacturer and distributor of cable and wire, has agreed to pay a $20 million penalty, to resolve the US government’s investigation into improper payments to government officials in Angola, Bangladesh, China, Indonesia and Thailand to corruptly gain business in violation of the Foreign Corrupt Practices Act (FCPA).
The penalty was announced Assistant Attorney General Leslie R. Caldwell of the Criminal Division of the Justice Department and Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division, on Thursday.
“General Cable paid bribes to officials in multiple countries in a scheme that involved a high-level executive of the company and resulted in profits of more than $50 million worldwide,” said Caldwell, in a statement. “But General Cable also voluntarily self-disclosed this misconduct to the government, fully cooperated and remediated. This resolution demonstrates the very real upside to coming in and cooperating with federal prosecutors and investigators. It also reflects our ongoing commitment to transparency.”
According to General Cable’s admissions, some parent-level and subsidiary-level employees, including executives, knew that some of its foreign subsidiaries used third-party agents and distributors to make corrupt payments to foreign officials in order to obtain and retain business. In one case the foreign subsidiary made corrupt payments directly to foreign officials. The corrupt conduct began in 2002. In 2011, when employees from a General Cable subsidiary expressed concerns to regional and parent-level executives that commission payments were being used for improper purposes, including potentially bribery, General Cable nevertheless failed to implement and maintain a system of internal accounting controls designed to detect and prevent such corruption and otherwise illegal payments.
According to admissions by General Cable made in connection with the resolution, these payments were discussed openly in email messages. For example, in June 2012, a sales agent in Bangladesh emailed an executive and other employees of General Cable’s subsidiary in Thailand and said that a portion of the money that the Thailand subsidiary paid the sales agent would “be shared by decision makers in [the] customer, concerned higher ups in [the] Ministry[,] and some top executives at [the] bidder.”
In May 2013, the executive, who had become an executive at General Cable in December 2012, approved a payment to the Bangladeshi sales agent. In addition, in 2011, the same executive, who was at that time working at General Cable’s Thailand subsidiary, informed a General Cable executive that payments to a distributor in Thailand were being used for corrupt purposes. General Cable did not investigate those payments, which continued to be made.
Between 2002 and 2013, General Cable subsidiaries paid approximately $13 million to third-party agents and distributors, a portion of which was used to make unlawful payments to obtain business, ultimately netting the company approximately $51 million in profits.
General Cable entered into a non-prosecution agreement and agreed to pay a criminal penalty of $20,469,694.80 to resolve the matter. As part of the agreement, General Cable has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program and to report to the department on the implementation of its enhanced compliance program.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against General Cable, whereby General Cable agreed to pay approximately $55 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined penalties and disgorgement paid by General Cable is approximately $75.75 million.