John Deere will pay nearly $10 million to the U.S. Securities and Exchange Commission (SEC) to resolve charges in relation to bribes its wholly owned subsidiary Wirtgen Thailand paid to win government contracts, the SEC announced this week.
The Moline-based global equipment manufacturer agreed to pay the SEC fine for Deere’s failure to integrate Wirtgen into its “compliance and controls environment,” the SEC said in a Tuesday, Sept. 10, news release. That federal agency’s role includes protecting investors from misconduct and promoting fairness and efficiency in securities markets.
Deere said in a company news release about the agreement that it had cooperated with the SEC in resolving the matter related to allegations that employees at Wirtgen Thailand – which Deere acquired seven years ago – made improper payments to foreign officials and others.
“These allegations represent a clear violation of our company policies and ethical standards,” John Deere said. “Furthermore, they are in direct conflict with our core values — particularly our commitment to integrity — and we strongly condemn such practices. The individuals involved in this matter are no longer with the company.”
According to the SEC order and case summary, Wirtgen Thailand employees from at least late 2017 through 2020 bribed Thai government officials with the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads to win multiple government contracts. They also bribed employees of a private company to win sales.
Bribes boosted profits
Bribes included cash payments, multiple massage parlor visits and international travel costs for government officials and private company employees. The SEC said Wirtgen Thailand made about $4.3 million in profits as a result of those actions. Improper payments were inaccurately recorded as legitimate expenses in Deere’s books and records, the SEC said.
“After acquiring Wirtgen Thailand in 2017, Deere failed to timely integrate it into its existing compliance and controls environment, resulting in these bribery schemes going unchecked for several years,” Charles E. Cain, chief of the SEC Enforcement Division’s FCPA Unit, said in the release. “This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place.”
The SEC order found that Deere violated the recordkeeping and internal accounting controls provisions of the Foreign Corrupt Practices Act. Deere consented to the entry of the SEC order requiring it to cease and desist from further violations and pay disgorgement and prejudgment interest totaling approximately $5.4 million and a civil penalty of $4.5 million, the SEC said.
“At Deere, we are committed to upholding the highest ethical standards in all our business endeavors and consider integrity a shared responsibility by all,” Deere said in its statement issued this week. “Whether employees are part of a traditional John Deere business or one of our many subsidiaries and controlled affiliates, each of our team members plays a vital role in promoting responsible business practices by adhering to our Code of Business Conduct and complying with our global policies. “
The SEC’s investigation was conducted by Michelle Ramos, Denise Hansberry, Sonali Singh, and Tracy L. Price of the SEC’s FCPA Unit.
