Last week the SEC reported that Diebold, Inc. agreed to pay more than $48 million in fines and prejudgment interest to settle SEC civil charges and DOJ criminal charges that it had violated the Foreign Corrupt Practices Act. Diebold also agreed to appoint an “independent compliance monitor.”

I don’t usually pay much attention to FCPA enforcement news releases, but a quote in this one from Scott W. Friestad, an Associate Director in the SEC’s Division of Enforcement, caught my eye:

“A bribe is a bribe, whether it’s a stack of cash or an all-expense-paid trip to Europe.”

According to the SEC’s complaint, Diebold provided numerous international leisure trips and related entertainment to officials of government-owned banks in China and Indonesia to the tune of approximately $1.7 million. Destinations reportedly included such places as the Grand Canyon, Napa Valley, Disneyland, Las Vegas, Paris, Amsterdam, Florence and Rome. The SEC alleged other misconduct, as well, such as direct cash payments hidden by phony service contracts.

The SEC charged that Diebold violated the Securities Exchange Act by:

• providing improper gifts to foreign officials to obtain and retain business (Section 30A),
• failing to have internal controls in place to detect and prevent the misconduct (Section 13(b)(2)(B)), and
• falsely recording improper payments as legitimate business expenses (Section 13(b)(2)(A)).

This is yet another reminder of the FCPA’s restrictions and the severe consequences of violations. I can’t help but wonder about how much (or little) Diebold profited from the alleged misconduct, the reputational impact of the settlement announcements, the total cost of investigating and defending the charges and the hassle of dealing with an “independent compliance monitor.” I suspect that Diebold’s management and board now believe, in retrospect, that the added incremental cost of strengthening their internal controls and FCPA training would have been money well spent.

Also, as Mr. Friestad so wisely and succinctly points out, a bribe is a bribe, no matter its form. It’s worth considering whether all of your personnel are sufficiently sensitive to that fundamental rule.