John Deere Agrees to Pay $10 Million in SEC Settlement Over Thai Bribery Scheme

Agricultural machinery giant John Deere has agreed to pay nearly $10 million to settle charges brought by the U.S. Securities and Exchange Commission (SEC) for violations of the Foreign Corrupt Practices Act (FCPA). The charges stem from a bribery scheme involving the company's Thai subsidiary, Wirtgen Thailand.

According to the SEC's order, from late 2017 through 2020, employees of Wirtgen Thailand engaged in a systematic bribery operation targeting both government officials and private sector employees in Thailand. The bribes, which included cash payments, visits to massage parlors, and international travel, were aimed at securing government contracts and private sales.

The government bodies involved in the scheme included the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads. As a result of these illicit activities, Wirtgen Thailand reportedly made approximately $4.3 million in profits.

The SEC's investigation revealed that John Deere had failed to properly integrate Wirtgen Thailand into its compliance and controls environment following its acquisition in 2017. This oversight allowed the bribery schemes to continue unchecked for several years.

The regulatory body found that John Deere violated the recordkeeping and internal accounting controls provisions of the FCPA. The company's books inaccurately recorded the improper payments as legitimate business expenses.

Without admitting or denying the SEC's findings, John Deere has agreed to:

1. Cease and desist from further violations
2. Pay disgorgement and prejudgment interest totaling approximately $5.4 million
3. Pay a civil penalty of $4.5 million

The total settlement amounts to nearly $10 million.

Charles E. Cain, Chief of the SEC Enforcement Division's FCPA Unit, commented on the case, "This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place."

This case underscores the importance of robust compliance programs, especially in the context of international acquisitions. It serves as a stark reminder to multinational corporations about the risks associated with overseas operations and the need for vigilant oversight of subsidiaries.

As global business practices come under increasing scrutiny, companies must prioritize the implementation of comprehensive anti-bribery measures and ensure that all parts of their organization, including newly acquired entities, adhere to the highest standards of ethical conduct.

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