In a settlement announced today with the DOJ and the SEC, Tyson Foods Inc. will pay a $4 million criminal penalty and $1.2 million in disgorgement and pre-judgment interest to resolve charges related to illegal payments by company representatives to government-employed inspection veterinarians in Mexico and a cover-up of the payments.
The DOJ said a criminal information filed in the District of Columbia with a two-year deferred prosecution agreement charges Tyson with conspiracy to violate the Foreign Corrupt Practices Act and with violating the FCPA.
The SEC “said it was not until two years after Tyson Foods officials first learned about the illicit payments that its counsel instructed Tyson de Mexico to cease making the payments.”
Tyson, headquartered in Springdale, Arkanasas, produces prepared food products. It admitted that employees at subsidiaries and agents made improper payments to government-employed veterinarians who inspected two of its chicken processing plants in Gomez Palacio, Mexico.
“Tyson and its subsidiary committed core FCPA violations by bribing government officials through no-show jobs and phony invoices, and by having a lax system of internal controls that failed to detect or prevent the misconduct,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Any company that exports meat products from Mexico, the DOJ said, must participate in an inspection program, supervised by the Mexican Department of Agriculture. According to court documents, the inspection program at each facility is supervised by an on-site veterinarian employed by the government of Mexico to ensure that all exports conform to Mexican health and safety laws.
Tyson’s Mexican subsidiary, Tyson de Mexico, paid $90,000 between 2004 and 2006 to two publicly-employed veterinarians who inspected its Mexican plants, generating profits for Tyson of $880,000. The payments went directly to the veterinarians and to their wives who were listed on Tyson de Mexico’s payroll. The bribes were intended to keep the veterinarians from disrupting the operations of the meat-production facilities. When payments to the spouses were terminated in 2004, Tyson representatives agreed to increase the amount paid to the veterinarians to match the amount previously paid to their spouses.
Tyson Foods Inc. trades on the NYSE under the symbol TSN.
View the DOJ’s February 10, 2011 release here.
View the SEC’s press release here.
Download the SEC’s civil complaint in SEC v. Tyson Foods Inc. here.