ADM increases settlement reserve to $54 million

Agribusiness giant Archer Daniels Midland Company said it nearly doubled the money set aside for an FCPA settlement.

In 2008, the Decatur, Illinois firm launched an internal investigation into deals for grain and feed exports that might have violated the FCPA and other laws.

It self disclosed the investigation to U.S. and foreign enforcement agencies in 2009.

It’s now in talks with the DOJ and SEC to settle potential violations.

As of the prior quarter, ADM had reserved $29 million to cover ‘disgorgement, penalties, and fines that may be paid by the Company in connection with this matter.’

But the company upped the reserve to $54 million of June 30, 2013, it said in its latest quarterly SEC filing.

ADM hasn’t said where the FCPA violations might have happened or the size of any potential illegal payments.

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Here’s the full FCPA disclosure from Archer Daniels Midland Company’s August 7, 2013 Form 10-Q:

Since August 2008, the Company has been conducting an internal review of its policies, procedures and internal controls pert taining to the adequacy of its anti-corruption compliance program and of certain transactions conducted by the Company and its affiliates and joint ventures, primarily relating to grain and feed exports, that may have violated company policies, the U.S. Foreign Corrupt Practices Act, and other U.S. and foreign laws. The Company initially disclosed this review to the U.S. Department of Justice (“DOJ”), the U.S. Securities and Exchange Commission (“SEC”), and certain foreign regulators in March 2009 and has subsequently provided periodic updates to the agencies. The Company engaged outside counsel and other advisors to assist in the review of these matters and has implemented, and is continuing to implement, appropriate remedial measures. The Company has completed its internal review and is engaged in discussions with the DOJ and SEC to resolve this matter. In connection with this review, government agencies could impose civil penalties or criminal fines and/or order that the Company disgorge any profits derived from any contracts involving inappropriate payments. Included in selling, general, and administrative expenses for the three and six months ended June 30, 2013 were charges for the Company’s current estimate of potential disgorgement, penalties, and fines that may be paid by the Company in connection with this matter of $29 million and $54 million, respectively. As of June 30, 2013, the estimated loss provision liability of $54 million is included in accrued expenses and other payables in the Company’s consolidated balance sheet. These events have not had, and are not expected to have, a material impact on the Company’s business or financial condition.

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Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.