Dun & Bradstreet Corporation agreed Monday to pay more than $9 million to resolve Foreign Corrupt Practices Act charges arising from improper payments made by two Chinese subsidiaries.
The subsidiaries “used third-party agents to make unlawful payments to obtain data vital to Dun & Bradstreet’s business as a provider of business financial information,” the SEC said.
The investigation into DnB’s China practices started in 2012.
In several securities filings, including one in February this year, Dun & Bradstreet said it shut down its Roadway subsidiary’s China operations in March 2012.
The action followed an investigation into possible FCPA violations and breaches of China’s data privacy laws.
In September 2012, the Shanghai District Prosecutor charged Roadway and five former employees with illegally obtaining private information of Chinese citizens.
The China court fined Roadway $160,000 and jailed the former employees.
Dun & Bradstreet self reported the possible FCPA offenses to the DOJ and SEC.
The SEC said Monday it fined Dun & Bradstreet $2 million as a civil penalty for the FCPA violations and ordered the company to disgorge about $6 million and pay prejudgment interest of $1.1 million.
The SEC resolved the case through an internal administrative order (pdf) and didn’t go to court.
Another Dun & Bradstreet subsidiary in China was called HDBC. It was formed in 2006. DnB owned 51 percent of the JV.
During due diligence of two local partners, Dun & Bradstreet had concerns about improper payments to government officials.
But after HDBC was formed, Dun & Bradstreet allowed the local China partners to operate the same way for at least two years, the SEC said. They continued bribing government officials in exchange for private information about individuals.
“These improper payments were falsely recorded as legitimate business expenses,” the SEC said.
“Dun & Bradstreet failed to take appropriate action to stop the improper payments or the false entries into the subsidiary’s books and records, which continued for several years post-acquisition,” the SEC said Monday.
The DOJ issued a declination letter (pdf) Monday to Dun & Bradstreet.
“[W]e have declined prosecution consistent with the FCPA Corporate Enforcement Policy,” the letter said.
The DOJ cited DnB’s prompt voluntary self-disclosure, its thorough investigation, and its full cooperation, including “making current and former employees available for interviews, and translating foreign language documents to English.”
Dun & Bradstreet enhanced its compliance program and internal accounting controls and fired 11 individuals involved in the China misconduct, the DOJ said. It disciplined other employees by “reducing bonuses, reducing salaries, lowering performance reviews, and formally reprimanding them.”
The DOJ also noted Dun & Bradstreet’s disgorgement to the SEC.
Dun & Bradstreet trades on the NYSE under the symbol DNB.
Richard L. Cassin is the publisher and editor of the FCPA Blog.