$280 Million Foreign Corrupt Practices Act (FCPA) & SEC Settlement

May 9, 2018

Panasonic Avionics Corporation (PAC), part of  global electronics company Panasonic Corporation (Panasonic), has agreed to pay $137 million dollars for alleged violations of the Foreign Corrupt Practices Act (FCPA).  The charges arise out of a scheme to retain “dummy” consultants used to conceal third-party payments for accounting fraud.

Acting Assistant Attorney General Cronan said,  “The Criminal Division will take all appropriate action to ensure that the investing public is able to trust the accuracy of the financial statements of companies that avail themselves of American securities exchanges.”

These types of actions are comparable to SEC Whistleblower actions. Under the SEC Whistleblower program individuals who blow the whistle on companies engaging in fraudulent behavior stand to recover an SEC whistleblower award that could range up to 30% of the recover.  Therefore, the SEC whistleblower in this case could have received an SEC whistleblower award of a staggering $41 million dollars.

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“Enforcement of the Foreign Corrupt Practices Act is critical in maintaining a fair and competitive international market to which all businesses are entitled,” said Acting Assistant Director Hacker.  “Along with our federal partners and the Department of Justice, the FBI will continue to aggressively investigate violations of the Foreign Corrupt Practices Act.”

According to admissions and court documents, PAC knowingly and willfully caused Panasonic to falsify its books and records through “dummy” consultants  who did little or no actual consulting.  In outstanding work done by the United States Government, The United States Attorney’s Office and the Federal agents (FBI) investigating the matter,  PAC admitted that it mischaracterized these payments as “consultant payments” on its general ledger, which it knew caused Panasonic to incorrectly designate those payments as “selling and general administrative expenses” on Panasonic’s books, records, and accounts.

SEC whistleblowers who know of companies falsifying their books, or who don’t have the best interest of the shareholders in mind are integral in making SEC qui tam cases.

By distorting the payments and providing false representations and Sarbanes-Oxley (SOX) subcertifications to Panasonic about PAC’s financials and financial controls, PAC caused Panasonic to falsify its books, records, and accounts in violation of the FCPA.

In a related proceeding, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Panasonic, who agreed to pay $143 million to the SEC. That makes the the combined total amount by the defendant $280 million, which could have triggered an $84 million dollar whistleblower award if someone blew the SEC whistle on this fraud.

If you know of any Foreign Corrupt Practices Act or need an SEC whistleblower lawyer, call (877) 561-0000 to consult with our firm.  The SEC whistleblower provisions have a mechanism where the whistleblower can potentially stay anonymous from start to finish. The SEC violations could stem from accounting falsifications, cooked books, no show jobs, or any of a variety of violations where the company is falsifying its records to the detriment of the shareholders.  Even if you’re not in the United States and know about these violations you could potentially receive an SEC whistleblowing award for your information.