World Acceptance Corporation pays SEC $21.7 million to resolve “bags of cash” FCPA offenses

World Acceptance Corporation agreed Thursday to pay the SEC $21.7 million in penalties and disgorgement to resolve FCPA offenses in Mexico.

In an internal administrative order, the SEC charged WAC with violating the FCPA’s anti-bribery, books and records, and internal accounting controls provisions. The consumer loan company agreed to disgorge $17.8 million plus prejudgment interest of $1.9 million, and civil penalties of $2 million.

A Mexican subsidiary of the Greenville, South Carolina-based company paid $4.1 million in bribes, directly or through intermediaries, to Mexican government officials and union officials to gain or keep business, the SEC said.

According to the SEC, from at least December 2010 through June 2017, WAC de Mexico, S.A. de C.V. paid bribes to obtain and retain business related to its Préstamos Viva business line (Viva). Viva offered small loans to state and federal government employees.

WAC Mexico signed at least 30 Viva contracts with government entities and worker unions representing government employees. It bribed Mexican government and union officials to ensure that loan repayments continued to be sent to the company.

WAC Mexico deposited money into bank accounts linked to the officials and hired an intermediary to “distribute large bags of cash” among the officials. The payments were referred to as “royalty payments,” “scholarship,” or “support,” the SEC said.

Of the $4.1 million in bribes, at least $1.5 million was paid to government officials, $580,000 was paid to union officials, and $480,000 to third-party intermediaries who used the funds to pay government officials and union officials. Due to the lack of appropriate recordkeeping, it is “unclear how the remaining $1.5 million in payments were split,” the SEC said.

WAC resolved the civil charges without admitting or denying the SEC’s findings.

In an SEC filing Thursday, WAC published a declination letter from the DOJ related to an investigation into the same activity in Mexico. The DOJ found bribery in Mexico, but declined to bring an enforcement action pursuant to its “Corporate Enforcement Policy, Justice Manual (“JM”) 9-47.120, and the Principles of Federal Prosecution of Business Organizations, JM 9-28.300.” The DOJ cited the company’s self-disclosure, proactive cooperation, and remediation.

In July 2018, WAC sold WAC de Mexico, S.A. de C.V. and currently doesn’t own any overseas subsidiaries, the SEC said.

The investigation into WAC’s Mexico operations was first disclosed in June 2017, according to data from FCPA Tracker.