U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19023 / January 6, 2005
Accounting and Auditing Enforcement
Release No. 2159 / January 6, 2005
SECURITIES AND EXCHANGE COMMISSION v. MONSANTO COMPANY, Case No. 1:05CV00014 (U.S.D.C., D.D.C) (filed January 6, 2005)
SEC SUES MONSANTO COMPANY FOR PAYING A BRIBE
MONSANTO SETTLES ACTION AND AGREES TO PAY A $500,000 PENALTY
MONSANTO ALSO ENTERS INTO DEFERRED PROSECUTION AGREEMENT WITH DEPARTMENT OF JUSTICE
On January 6, 2005, the Commission filed two settled enforcement proceedings charging Monsanto Company, a global producer of technology-based solutions and agricultural products headquartered in St. Louis, Missouri, with making illicit payments in violation of the Foreign Corrupt Practices Act ("FCPA"). First, the Commission filed a lawsuit in the United States District Court for the District of Columbia charging Monsanto with violating the FCPA and seeking a civil penalty. Second, the Commission issued an administrative order finding that Monsanto violated the anti-bribery, books-and-records, and internal-controls provisions of the FCPA, ordering Monsanto to cease and desist from such violations, and requiring Monsanto to retain an independent consultant to review and make recommendations concerning the company's FCPA compliance policies and procedures. Without admitting or denying the Commission's charges, Monsanto consented to the entry of a final judgment in the federal lawsuit requiring it to pay a $500,000 civil penalty and consented to the Commission's issuance of its administrative order.
In both its federal court complaint and its administrative order, the Commission charged that, in 2002, a senior Monsanto manager, based in the United States, authorized and directed an Indonesian consulting firm to make an illegal payment totaling $50,000 to a senior Indonesian Ministry of Environment official ("the senior Environment Official"). The bribe was made to influence the senior Environment Official to repeal an unfavorable decree that was likely to have an adverse effect on Monsanto's business. Although the payment was made, the unfavorable decree was not repealed. The Commission further charged that the senior Monsanto manager devised a scheme whereby false invoices were submitted to Monsanto and the senior Monsanto manager approved the invoices for payment.
In addition, the Commission charged that, from 1997 to 2002, Monsanto inaccurately recorded, or failed to record, in its books and records approximately $700,000 of illegal or questionable payments made to at least 140 current and former Indonesian government officials and their family members. The approximate $700,000 was derived from a bogus product registration scheme undertaken by two Indonesian entities owned or controlled by Monsanto. The largest single set of payments was for the purchase of land and the design and construction of a house in the name of the wife of a senior Ministry of Agriculture official. The Commission further charged that, in certain instances, entries were made in the books and records of the two Indonesian entities that concealed the source, use and true nature of these payments.
As a result of the conduct described above, the Commission charged that Monsanto violated the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934). The Commission further charged that Monsanto violated Section 13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep books, records, and accounts, which accurately and fairly reflect their transactions and disposition of their assets. The Commission further charged that Monsanto violated Section 13(b)(2)(B) of the Exchange Act, which requires all reporting companies to devise and maintain a system of internal accounting controls sufficient to, among other things, provide reasonable assurances that transactions are properly recorded. The Commission further charged that Monsanto violated Section 13(b)(5) of the Exchange Act, which prohibits any person or company from knowingly circumventing or knowingly failing to implement a system of internal accounting controls as described in Section 13(b)(2)(B), or knowingly falsifying any book, record, or account as described in Section 13(b)(2)(A). Finally, the Commission charged that Monsanto violated Rule 13b2-1 of the Exchange Act, which prohibits any person or company from, directly or indirectly, falsifying or causing to be falsified, any book, record or account subject to Section 13(b)(2)(A).
In determining to accept Monsanto's settlement offer, the Commission considered the cooperation that Monsanto provided the Commission staff during its investigation.
In a related proceeding, the United States Department of Justice has entered into an agreement with Monsanto Company to defer prosecution on charges of violating the anti-bribery and books and records provisions of the FCPA. Under the Agreement, the Justice Department has filed a criminal information charging the company; Monsanto will pay a $1 million monetary penalty; and Monsanto will retain for a period of three years an independent compliance expert to audit the company's compliance program and monitor its implementation of and compliance with new internal policies and procedures.
The Commission acknowledges the assistance of the Department of Justice in its investigation, which is continuing.
SEC Complaint in this matter