Panasonic agreed Monday to pay $280 million to resolve FCPA offenses for payments to consultants of its U.S. in-flight-entertainment unit in the Middle East and Asia.
Osaka, Japan-based Panasonic Corporation will pay $143 million in disgorgement to the Securities and Exchange Commission.
Its U.S. unit — Panasonic Avionics Corporation — will pay $137 million in criminal penalties to the DOJ.
Panasonic Avionics also entered into a deferred prosecution agreement (pdf) with the DOJ. The DPA requires an independent monitor for at least two years.
The DOJ charged (pdf) Panasonic Aviation in federal court in the District of Columbia with one count of “knowingly and willfully causing the falsification of the books, records, and accounts” of its parent company Panasonic.
Panasonic Aviation agreed to continue cooperating with the DOJ and to enhance its compliance program.
The SEC settled with Panasonic Corporation through an internal administrative order (pdf) and didn’t go to court.
The SEC said Panasonic Avionics offered a consulting contract “to a government official at a state-owned airline to induce the official to help” the company win work from the airline.
Panasonic Avionics paid the official consulting fees of $875,000 over six years.
The airline awarded contracts worth more than $92 million in revenue to Panasonic.
Panasonic Avionics also hid more than $7 million in payments to sales agents in Asia. The payments were falsely recorded as legitimate business expenses.
The FCPA offenses occurred from 2007 to 2016.
Panasonic Avionics is based in Lake Forest, California. It designs and distributes in-flight entertainment systems and global communications services for airlines and airplane manufacturers.
“According to admissions and court documents,” the DOJ said Monday, Panasonic Avionics “formally terminated its relationship with these sales agents, as required by its compliance policies, but [its] employees then secretly continued to use the agents by having them rehired as sub-agents of another company, which had passed [Panasonic Avionics’s] due diligence checks.”
Panasonic first disclosed the FCPA investigation in an SEC filing in February 2017.
The DOJ said it discounted Panasonic Avionics’s criminal fine by 20 percent because of its cooperation and remediation. The remediation included “causing several senior executives who were either involved in or aware of the misconduct to be separated” from Panasonic.
Richard L. Cassin is the publisher and editor of the FCPA Blog.