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Harry Cassin
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ADM pays $54.3 million to settle Ukraine tax bribes

A unit of Archer Daniels Midland Company (ADM) pleaded guilty Friday to violating the FCPA by bribing Ukrainian government officials through vendors in exchange for value-added tax (VAT) refunds.

The Ukraine unit — called Alfred C. Toepfer International Ukraine Ltd. (ACTI) — paid a criminal fine of $17.8 million to the DOJ.

ADM also paid $36.5 million in disgorgement and prejudgment interest to resolve civil charges brought by the Securities and Exchange Commission.

ACTI pleaded guilty in the Central District of Illinois Friday to one count of conspiracy to violate the anti-bribery provisions of the FCPA.

The parent, ADM, signed a non-prosecution agreement with the DOJ, admitting it failed to have adequate internal controls needed to prevent bribery in Ukraine and through a joint venture in Venezuela.

In November, ADM — an agribusiness based in Illinois — said it had completed its internal FCPA investigation and reserved $54 million for a settlement.

From 2002 to 2008, ACTI and another ADM subsidiary in Europe paid third-party vendors $22 million to pass as bribes to Ukrainian government officials for VAT refunds, the DOJ said. In return, the ADM companies received $100 million in VAT refunds.

The bribes were usually 18 to 20 percent of the corresponding VAT refunds, the SEC said.

The subsidiaries artificially inflated commodities contracts with a Ukrainian shipping company to provide bribe payments to government officials. In another scheme, the subsidiaries created phony insurance contracts with an insurance company that included false premiums passed on to Ukraine government officials. The misconduct went unchecked by ADM for several years because of its deficient and decentralized system of FCPA oversight over subsidiaries in Germany and Ukraine.

The DOJ and SEC said they took into account ADM’s cooperation and “significant remedial measures, including self-reporting, implementing a comprehensive new compliance program, and terminating employees involved in the misconduct.”

The DOJ’s December 20, 2013 release is here.

The SEC’s release and civil complaint are here.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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