SEC Charges Diebold with FCPA Violations in China, Indonesia and Russia

SEC v. Diebold, Inc., Case No. 1:13-cv-01609 (D.D.C.).  On October 22, 2013, the SEC announced it filed a settled Foreign Corrupt Practices Act case against ATM maker Diebold, Inc.  According to the SEC, Diebold, through its Chinese subsidiary, gave European and U.S. trips to officials of government owned banks in China.  The SEC alleges that Diebold spent approximately $1.6 on these trips, entertainment, and other improper gifts.  Likewise, Diebold spent more than $147,000 on trips and entertainment for Indonesian government officials. The SEC further alleges that Diebold executives overseeing operations in Asia knew of these payments, which were falsely recorded in Diebold’s books and records as training or other legitimate business expenses.  The SEC also alleges that Diebold, through its Russian subsidiary, paid bribes of about $1.2 million on the sale of ATMs to private banks in Russia.  The bribes were funneled through a Diebold distributor in Russia by executing fake contracts to make the bribes appear as though they were legitimate business expenses.

Without admitting or denying the charges, Diebold consented to entry of a judgment enjoining the company from future violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act.  The judgment orders the company to pay $22,972,942 in disgorgement and prejudgment interest, and requires the appointment of an independent compliance monitor.  In a parallel criminal proceeding, Diebold has agreed to pay a $25.2 million criminal fine as part of a deferred prosecution agreement with the U.S. Department of Justice.

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