The Securities & Exchange Commission (“SEC”) announced last week that it charged The Goodyear Tire & Rubber Company (“Goodyear”) with violating the Foreign Corrupt Practices Act (“FCPA”), and that Goodyear agreed to pay more than $16 million to settle the SEC’s charges. The SEC did not, however, impose any civil penalty, stressing Goodyear’s self-reporting of the violation, cooperation with the SEC’s investigation, and prompt remedial actions. The case highlights steps a company can take after learning of an FCPA violation to minimize sanctions, but it also serves as a useful reminder that parent companies must carefully monitor their subsidiaries and operations in high-risk jurisdictions to avoid potential liability under the FCPA.
According to the SEC, from 2007 to 2011, a Goodyear subsidiary in Kenya, Treadsetters Tyres Ltd. (“Treadsetters”), and a subsidiary in Angola, Trentyre Angola Lda. (“Trentyre”), routinely paid bribes to employees of government-owned entities, private companies, and other local authorities to secure tire sales. The two Goodyear subsidiaries made over $3.2 million in illicit payments, and the bribery payments were falsely recorded as legitimate business expenses. Both the payments and the resulting revenue were consolidated into Goodyear’s financial reports.
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