The Department of Justice has dropped its Foreign Corrupt Practices Act probe of SL Industries Inc. without filing charges, the New Jersey-based power technology company said in its annual report Wednesday.
SL Industries first disclosed an internal investigation in May 2012. The probe focused on whether employees of three China subsidiaries had improperly provided gifts and entertainment to government officials.
The company said it contacted the DOJ and the SEC “voluntarily to disclose . . . an internal investigation, and agreed to cooperate fully.”
It hired outside counsel to review practices in China and Mexico.
Going forward, it said Wednesday, the reviews will happen every year.
“On September 26, 2013,” SL Industries said Wednesday, “the DOJ notified the company that it had closed its inquiry into this matter without filing criminal charges.”
The company said it hasn’t “received an update from the SEC regarding the status of its inquiry.”
Here’s the full FCPA disclosure from SL Industries’ Form 10-K (annual report) filed with the SEC on March 19, 2014:
During 2012, the Company conducted an investigation to determine whether certain employees of SL Xianghe Power Electronics Corporation, SL Shanghai Power Electronics Corporation and SL Shanghai International Trading Corporation, three of the Company’s indirect wholly-owned subsidiaries incorporated and operating exclusively in China, may have improperly provided gifts and entertainment to government officials (the “China Investigation”). The Company had retained outside counsel and forensic accountants to assist in the China Investigation. Based upon the China Investigation, the estimated amounts of such gifts and entertainment were not material to the Company’s financial statements. Such estimates did not take into account the costs to the Company of the China Investigation itself, or any other additional costs.
The China Investigation included determining whether there were any violations of laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”). The Company’s outside counsel contacted the DOJ and the Securities and Exchange Commission (the “SEC”) voluntarily to disclose that the Company was conducting an internal investigation, and agreed to cooperate fully. Additionally, the Company hired outside consultants to provide assistance in implementing a mandatory FCPA compliance program for all of its employees which is now completed by such employees annually. Also, during the first and second quarters of 2013 the Company engaged outside consultants to perform FCPA compliance tests at its operations in China and Mexico, which, going forward, will be performed by the Company annually. On September 26, 2013, the DOJ notified the Company that it had closed its inquiry into this matter without filing criminal charges. The Company has not received an update from the SEC regarding the status of its inquiry. The Company cannot predict at this time whether any action may be taken by the SEC.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.