Manhandled Abroad

The SEC said today that it brought a civil enforcement action against four former employees of Dimon, Inc., now Alliance One International, Inc. It charged them with violating the anti-bribery provisions of the Foreign Corrupt Practices Act and aiding and abetting violations. The defendants agreed to settle the charges.

From 1996 through 2004, Dimon’s subsidiary in Kyrgyzstan paid more than $3 million in bribes to various government officials to purchase Kyrgyz tobacco. Defendant Bobby J. Elkin, Jr., 49, a former country manager for Kyrgyzstan, arranged the bribes through a bank account held under his name called the Special Account.

Another defendant, Baxter J. Myers, 65, a former regional financial director, authorized transfers from a Dimon subsidiary’s bank account to the Special Account, and defendant Thomas G. Reynolds, 54, a former corporate controller, recorded the payments made from the Special Account in Dimon’s books.

Dimon also paid bribes in a scenario familiar to many western companies operating in high-risk countries. Its office, according to the SEC’s civil complaint, was subjected to continuous audits by Kyrgyz tax officials. Some Dimon personnel devoted most of their work hours to answering questions from the tax inspectors. As soon as one audit finished, another would begin. The inspectors were never satisfied. Because Dimon once “failed to submit two reports to the tax office,” they imposed a  fine of about $171,741 and threatened to seize its bank accounts and tobacco inventory. The tax inspectors later offered to reduce the penalties in exchange for Dimon’s cash payment.

Separately, from 2000 to 2003, Dimon paid bribes of about $542,590 to officials of the government-controlled Thailand Tobacco Monopoly in exchange for about $9.4 million in sales contracts. Defendant Tommy L. Williams, 55, a former sales executive, directed tobacco sales from Brazil and Malawi to the Thailand Tobacco Monopoly through Dimon’s agent in Thailand. He authorized the payment of bribes to government officials of the Thailand Tobacco Monopoly. These bribes were characterized as commissions paid to Dimon’s agent in Thailand.

Defendants Myers and Reynolds  agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).

Alliance One International, Inc. was formed in May 2005 — after the offenses described in the SEC’s complaint — with the merger of Dimon and Standard Commercial Corporation. The company trades on the NYSE under the symbol AOI.

View the SEC’s April 29, 2010 Litigation Release No. 21509 in Securities and Exchange Commission v. Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams, Civil Action No. 1:10-cv-00661 (RMU) (D.D.C.) (filed April 28, 2010) here.

Download a copy of the SEC civil complaint here.