The US agricultural and construction equipment firm Deere has agreed to pay $10 million to settle US Securities and Exchange Commission (SEC) charges that its Thai subsidiary bribed state agencies to win business.
The bribes took the form of massage parlour services, lavish overseas trips and other improper gifts to win government business, the SEC said in a statement released on Tuesday in Washington.
Wirtgen Thailand, the wholly owned local subsidiary of Deere, committed the offences between late 2017 through 2020. The recipients were officials of state agencies including the Royal Thai Air Force, the Department of Highways and the Department of Rural Roads. No details were available about the positions of the bribe recipients.
Other bribes were paid to a large Thai construction contractor identified in the SEC case summary only as “Company A”.
The SEC said payments were made even though the subsidiary’s code of conduct prohibited giving “absolutely anything” to improperly influence government officials. Such actions are punishable under the Foreign Corrupt Practices Act (FCPA) in the United States.
The payments made from late 2017 through 2020 allegedly took the form of cash, meals, fake consulting fees, sightseeing ventures disguised as “factory visits” in Switzerland and other European countries, and massage parlour “entertainment”, the SEC said.
One excerpt from the SEC report reports exchanges between Wirtgen executives about the Department of Highways and the Department of Rural Roads:
“For instance, in April 2019, 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.’”
Deere’s payment includes a $4.5-million civil fine, the disgorgement of $4.34 million of improper benefits, and $1.09 million in interest.
The SEC said the settlement agreement reflected Illinois-based Deere’s cooperation with the regulator, the termination of employees involved in misconduct, and upgrades to compliance procedures and anti-bribery training.
“These allegations represent a clear violation of our company policies and ethical standards,” Deere said in a statement. “They are in direct conflict with our core values — particularly our commitment to integrity — and we strongly condemn such practices.”
“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,” said Charles Cain, chief of the FCPA unit at the SEC Enforcement Division.
“This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place.”