• ITVI.USA
    15,378.070
    -88.350
    -0.6%
  • OTLT.USA
    2.743
    0.001
    0%
  • OTRI.USA
    20.820
    0.290
    1.4%
  • OTVI.USA
    15,350.040
    -89.040
    -0.6%
  • TSTOPVRPM.ATLPHL
    3.280
    -0.020
    -0.6%
  • TSTOPVRPM.CHIATL
    3.190
    0.050
    1.6%
  • TSTOPVRPM.DALLAX
    1.560
    -0.030
    -1.9%
  • TSTOPVRPM.LAXDAL
    3.420
    0.090
    2.7%
  • TSTOPVRPM.PHLCHI
    2.220
    0.050
    2.3%
  • TSTOPVRPM.LAXSEA
    4.080
    0.000
    0%
  • WAIT.USA
    126.000
    1.000
    0.8%
  • ITVI.USA
    15,378.070
    -88.350
    -0.6%
  • OTLT.USA
    2.743
    0.001
    0%
  • OTRI.USA
    20.820
    0.290
    1.4%
  • OTVI.USA
    15,350.040
    -89.040
    -0.6%
  • TSTOPVRPM.ATLPHL
    3.280
    -0.020
    -0.6%
  • TSTOPVRPM.CHIATL
    3.190
    0.050
    1.6%
  • TSTOPVRPM.DALLAX
    1.560
    -0.030
    -1.9%
  • TSTOPVRPM.LAXDAL
    3.420
    0.090
    2.7%
  • TSTOPVRPM.PHLCHI
    2.220
    0.050
    2.3%
  • TSTOPVRPM.LAXSEA
    4.080
    0.000
    0%
  • WAIT.USA
    126.000
    1.000
    0.8%
American Shipper

Panasonic subsidiary settles bribery case

Inflight entertainment system designer has agreed to pay a $137.4 million criminal penalty to settle charges that it violated the Foreign Corrupt Practices Act.

   The U.S. Justice Department on Monday said Panasonic Avionics Corp. (PAC), a subsidiary of Panasonic, has agreed to pay a $137.4 million criminal penalty to settle charges that it violated the Foreign Corrupt Practices Act (FCPA). 
   According to its own admission, PAC became involved in a scheme to retain consultants for illicit purposes and conceal payments to third-party sales agents.
   “When Panasonic Avionics Corp. caused its publicly traded parent company to falsify its books and records, it distorted the information available to legitimate investors,” said Acting Assistant Attorney General John P. Cronan in a statement.  
   Lake Forest, Calif.-based PAC designs and distributes inflight entertainment systems and global communications services to airlines and plane manufacturers. 
   According to court documents, the consultants hired by PAC did little or no actual work for the company. Instead, they were retained through a third-party service provider and paid from a budget over which a senior PAC executive had control and discretion.  
   One of the consultants was employed by a state-owned airline and involved in negotiating a lucrative contract amendment on behalf of the airline with PAC. The Justice Department said PAC paid the consultant $875,000 over a six-year period, but earned more than $92 million in profits from portions of the contract over which the consultant had involvement or influence while employed with the airline.  
   PAC admitted that it described payouts as “consultant payments” on its general ledger, which caused Panasonic to incorrectly designate those payments as “selling and general administrative expenses” on its books, records and accounts, the Justice Department said.
   The company also admitted that employees in its Asia region hid PAC’s use of certain sales agents, which did not pass the company’s internal diligence requirements. PAC formally ended its relationship with these sales agents, as required by its compliance policies, but PAC employees then secretly continued to use the agents by having them rehired as subagents of another company, which passed PAC’s due-diligence checks. Through this process, PAC employees hid more than $7 million in payments to at least 13 subagents, the Justice Department said.
   PAC entered into a “deferred prosecution agreement” in connection with a criminal information filed Monday in the U.S. District Court for the District of Columbia, charging the company with one count of “knowingly and willfully causing the falsification of the books, records and accounts” of its parent Panasonic, which resulted in the $137.4 million criminal penalty.
   As part of the settlement, PAC also agreed to continue cooperating with federal investigators; enhance its compliance program, including hiring a chief compliance officer; implement stronger internal controls; and retain an independent corporate compliance monitor for at least two years.
   “We are pleased to have resolved these investigations; we have taken extensive steps over the past few years to strengthen Panasonic Avionics’ compliance programs and internal controls, and we welcome an independent compliance monitor to assess our progress,” said Hideo Nakano, PAC’s CEO, in a statement.
   In addition, the Securities and Exchange Commission filed a cease-and-desist order against Panasonic, whereby the company agreed to pay about $143 million in disgorgement to the SEC, including prejudgment interest.  
   The combined total amount of U.S. criminal and regulatory penalties to be paid by Panasonic and PAC is more than $280 million.

We are glad you’re enjoying the content

Sign up for a free FreightWaves account today for unlimited access to all of our latest content

By signing in for the first time, I give consent for FreightWaves to send me event updates and news. I can unsubscribe from these emails at any time. For more information please see our Privacy Policy.