Deere & Company, also known as John Deere, has agreed to pay nearly $10 million to settle charges over alleged bribery in Thailand.
The SEC charges relate to violations of the Foreign Corrupt Practices Act (FCPA) involving its subsidiary, Wirtgen Thailand.
Bribery Scheme and SEC Findings
According to the SEC’s findings, between late 2017 and 2020, employees of Wirtgen Thailand engaged in bribery to secure government contracts.
It is claimed bribes were paid to officials within the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads. It is alleged employees of a private company were also bribed.
Thealleged bribes took various forms, including cash payments, visits to massage parlors, and international travel for both government officials and private employees. The bribery scheme resulted in approximately $4.3 million in profits for Wirtgen Thailand.
Recordkeeping Failures at John Deere
The SEC uncovered these improper payments were falsely recorded as legitimate expenses in John Deere’s books and financial records.
After acquiring Wirtgen Thailand in 2017, Deere failed to quickly integrate the subsidiary into its existing compliance and internal accounting controls. This oversight allowed the bribery scheme to continue unchecked for several years.
Need Career Advice? Get employment skills advice at all levels of your career
Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said:
“After acquiring Wirtgen Thailand in 2017, Deere failed to timely integrate it into its existing compliance and controls environment, resulting in these bribery schemes going unchecked for several years.
“This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place.”
Financial Penalties and Settlement
John Deere has agreed to pay $5.4 million in disgorgement and prejudgment interest. The company will also pay a civil penalty of $4.5 million.
Without admitting or denying the SEC’s findings, John Deere consented to a cease-and-desist order to prevent further violations of the FCPA.
Key Lessons for Global Corporations
This case serves as a reminder to corporations of the importance of quickly integrating newly acquired subsidiaries into their compliance and controls systems. As shown in the John Deere case, failing to do so can result in significant legal and financial consequences. Corporations must ensure that internal accounting controls are robust to prevent similar violations in the future.