December 16, 2013 — Under the U.S. Foreign Corrupt Practices Act (FCPA), it is a crime to bribe a foreign official as a means to advance foreign business interests. Companies are prohibited from foreign bribery and so are third parties retained by companies doing business abroad. When FCPA violationsoccur, they are often uncovered by inside employees. For whistleblowers who collaborate with the Securities and Exchange Commission (SEC) in connection with FCPA violations, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 makes substantial financial rewards available.
Diebold Subsidiaries in China Lavished State-Owned Bank Officials With Gifts of Cash and Foreign Travel
Diebold, Inc., the Ohio manufacturer of bank security systems and ATMs, has been charged with FCPA violations in China and Indonesia. According to the SEC, Diebold subsidiaries in China and Indonesia showered government-owned bank officials in those countries with $1.8 million in entertainment, travel and other gifts in an effort to influence the purchasing decisions of banks there. Diebold then made phony entries in its books, describing the bribes as legitimate training expenses. In addition, Diebold’s subsidiary in China paid annual cash gifts varying between $100 and $600 to dozens of government bank officials. The company also falsified its books to conceal $1.2 million in bribes paid in Russia to employees of privately owned banks. Diebold has agreed to pay $48 million to resolve the matter.
According to the SEC, the foreign bribery took place between 2005 and 2010. At a government-owned bank in China, eight officials were treated — at Diebold’s expense — to a two-week European vacation with stops in Rome, Paris, Brussels and Munich. Some traveled to the U.S. to take in the sites at the Grand Canyon, New York City, Hawaii or Napa Valley. Other officials received expense-paid trips to alternate destinations, including New Zealand, Australia and Bali. The Chinese banking officials received $1.6 million in bribes, while the government officials at banks in Indonesia took in $147,000 in illegal gifts and payments.
To settle the FCPA violation charges, Diebold consented to pay $22.9 million in disgorgement and prejudgment interest. The company will also appoint an independent compliance monitor. In addition, Diebold must pay a fine of $25.2 million to resolve a parallel criminal proceeding.
Whistleblowers Shine Spotlight on FCPA Violations
Foreign bribery is a crime that hurts everyone by hurting our nation’s business interests and economy. The Dodd-Frank Act authorizes compensation for tipsters who collaborate with the SEC. Waters & Kraus is a nationwide qui tam law firm with offices in California, Maryland and Texas. Our whistleblower lawyers are devoted to protecting the rights of informants who notify the SEC about foreign corruption. Contact us by email or phone our FCPA attorneys at 855.784.0268 to learn how we can help you help our government.