Economy

Panasonic subsidiary pays $280M to settle false records, bribery charges

Panasonic subsidiary pays $280M to settle false records, bribery charges

PAC has "offered a lucrative position of consultant to a government official of a public airline" in the Middle East in exchange for the latter's support on tenders, accuses the SEC in a statement.

The payments were made between 2008 and 2014 at a time when PAC was negotiating two agreements with the airline worth more than $700 million, according to the Securities and Exchange Commission, which called the payments "a bribery scheme".

Partner Matthew Jones, also on Panasonic's team, was formerly chief counsel to Machen at the US attorney's office.

Panasonic employees in Asia hired sales agents, who failed to pass company requirements, to work as "sub-agents" of a separate company, hiding in the process more than $7 million paid out to at least 13 sub-agents, prosecutors said. The consultants did little or no actual consulting work and paid through a third-party service provider out of funds the company president allegedly controlled with little or oversight by anyone at Panasonic or PAC, the Justice Department said.

"When Panasonic Avionics Corporation caused its publicly-traded parent company to falsify its books and records, it distorted the information available to legitimate investors", Acting Assistant Attorney General John Cronan said in a statement. According to court documents, that consultant was subsequently paid $875,000 by PAC over a six-year period and PAC earned over $92 million in profits from portions of the contract over which the consultant had some involvement or influence while employed with the airline. PAC labeled the payments as "consultant payments", leading Panasonic to incorrectly record them in its books. According to admissions and court documents, PAC formally terminated its relationship with these sales agents, as required by its compliance policies, but PAC employees then secretly continued to use the agents by having them rehired as sub-agents of another company, which had passed PAC's due diligence checks.

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The payments were made by US-based subsidiary, Panasonic Avionics Corp, between 2007 and 2016, the USA said.

Wilmer Hale partner Ronald Machen, a former USA attorney for the District of Columbia, served as lead defense counsel for Panasonic Avionics Corp. a supplier of in-flight entertainment and communications systems, which agreed to pay a $137.4 million penalty as part of a deferred prosecution agreement with the Justice Department. "We have taken steps in recent years to strengthen Panasonics Avionics' internal controls and compliance programs", he added.

The fine includes $143m to resolve the charges from the SEC, a financial regulator, as well as $137.4m for the charges brought by the US Justice Department.

The Justice Department agreed to hold off on prosecuting the company, according to court records. $143 million for FCPA violations and accounting fraud.

Panasonic agreed to improve its compliance program, hire an independent monitor and continue to cooperate in "any ongoing investigation", the court filings said.


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