Crain News Service report
WASHINGTON (Feb. 24, 2015) — Goodyear has agreed to pay more than $16 million to settle charges from the Securities and Exchange Commission (SEC) that the tire maker's subsidiaries paid bribes to gain tire sales in Kenya and Angola.
The SEC claimed in its order instituting a settled administrative proceeding that Goodyear violated the Foreign Corrupt Practices Act (FCPA) by failing “to prevent or detect more than $3.2 million in bribes during a four-year period due to inadequate FCPA compliance controls at its subsidiaries in sub-Saharan Africa.”
Bribes generally were paid in cash to employees of private companies or government-owned entities along with local authorities such as police or city council officials, the SEC said. The payments were falsely recorded as legitimate business expenses in the books and records of the subsidiaries, which then were consolidated into Goodyear's financial reports, according to the agency.
“Public companies must keep accurate accounting records, and Goodyear's lax compliance controls enabled a routine of corrupt payments by African subsidiaries that were hidden in their books,” Scott W. Friestad, associate director of the SEC's Enforcement Division, said in a statement. “This settlement ensures that Goodyear must forfeit all of the illicit profits from business obtained through bribes to foreign officials as well as employees at commercial companies in Angola and Kenya.”
The SEC said “Goodyear neither admitted nor denied the SEC's findings.” The agency said the settlement reflects the company's “self-reporting, prompt remedial acts and significant cooperation with the SEC's investigation.”
Goodyear was ordered to pay $14.1 million to reflect “the company's illicit profits in Kenya and Angola,” along with $2.11 million interest. It also must report its FCPA remediation efforts to the SEC for a three-year period.
The Akron-based tire maker said in a statement that in 2011 it received an allegation through its confidential ethics hotline regarding improper payments in Kenya and from an employee in Angola about improper payments in that nation.
The company said it launched an investigation and voluntarily disclosed the results of the probe to the Department of Justice and the SEC. It also said it cooperated with those agencies in the review of the allegation.
As a result of the review, Goodyear said it “has implemented, and is continuing to implement, appropriate remedial measures.”
The firm said it divested its ownership interest in the Kenyan business in 2013 and is in the process of selling the Angolan business. It said the settlement with the SEC fully resolves all outstanding issues related to these investigations.