Sony Corp. started an investigation last year of its India entertainment operations for possible bidding fraud, kickbacks, and bribery, according to internal emails leaked as part of a cyber attack on the company.
Sony Pictures Entertainment hired Ernst & Young for the investigation. EY uncovered potential evidence of wrongdoing, according to the emails, Bloomberg said Wednesday.
Investigators found that MSM Discovery — a joint venture between Sony and Discovery Communications Inc. — “may have engaged in fraudulent bids, kickbacks, and excessive handouts to government officials,” Bloomberg said, citing a leaked memo sent to the chief financial officer of Sony Pictures Entertainment in October.
In the email from early October, sent by Cindy Salmen, senior vice-president and compliance counsel, Sony Pictures Entertainment’s financial compliance division outlined four “areas of concern” at the MSM Discovery Indian venture. The memo recommended further investigations be conducted, employees be re-trained, and that some workers face disciplinary actions, including termination.
Ernst & Young investigated allegations of kickbacks to the MSM Discovery unit ranging from 10 percent to 15 percent of some broadcast fees. “Some employees who were fired for carriage-fee kickbacks at another company were employed at MSM Discovery,” a leaked memo said.
An investigation into potential gifts and entertainment of Indian government officials found “evidence of employees providing tickets to Indian Premier League cricket matches to public servants, as well as laptop bags that were requested as gifts for government officials during the Diwali festival,” the memo said.
IPL tickets can cost up to about $400 each, Bloomberg said.
The investigation also “raised questions about certain payments to Indian customs by MSM Discovery’s marketing group,” the leaked memo said, without providing more details.
Bloomberg said India is the biggest market in Sony’s media networks division. Last year, India accounted for 37 percent of the business’ $1.6 billion in global revenues.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.