U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21727 / November 4, 2010
Accounting and Auditing Enforcement Release No. 3205 / November 4 , 2010
SEC v. Panalpina, Inc., Civil Action No. 4:10-cv-4334 (S.D. Texas, November 4, 2010).
SEC CHARGES PANALPINA WITH VIOLATING THE FOREIGN CORRUPT PRACTICES ACT
The Securities and Exchange Commission today charged the U.S. subsidiary of Panalpina World Transport (Holding) Ltd. (PWT), a global freight forwarding and logistics services provider based in Basel, Switzerland, with violating the Foreign Corrupt Practices Act (FCPA) by bribing foreign officials around the world on behalf of its customers.
The SEC's complaint, filed in federal district court in Houston, alleges that from 2002 through 2007 Panalpina, Inc. (Panalpina), in concert with other PWT subsidiaries and affiliates (Panalpina Group), bribed government officials in countries including Nigeria, Angola, Brazil, Russia, and Kazakhstan. The bribes were paid by Panalpina to obtain preferential customs, duties, and import treatment for its customers in connection with international freight shipments. Although PWT, Panalpina, and the Panalpina Group are not issuers for purposes of the FCPA, many of their customers are. By paying bribes on behalf of issuers, Panalpina both violated and aided and abetted violations of the FCPA.
To settle the SEC's charges, Panalpina will pay $11,329,369. PWT and Panalpina will pay an additional $70,560,000 to resolve related criminal proceedings announced today by the Department of Justice.
The complaint alleges that although the bribery schemes varied, most shared several similarities. The customers often used Panalpina or other Panalpina Group companies to ship goods internationally or sought Panalpina's assistance in obtaining customs or logistics services in the country to which goods were shipped. For various reasons—including delayed departures, insufficient or incorrect documentation, the nature of the goods being shipped and imported, or the refusal of local government officials to provide services without unofficial payments—Panalpina's customers sometimes faced delays in importing goods. In other cases, Panalpina's customers sought to avoid local customs duties or inspection requirements or otherwise sought to import goods in circumvention of local law. In order to secure the importation of goods under these circumstances, Panalpina's customers often authorized Panalpina and other Panalpina Group companies to bribe foreign officials.
The complaint further alleges that Panalpina Group companies invoiced Panalpina's customers for the bribes. The invoices, which contained both legitimate and illegitimate charges, concealed the bribes by inaccurately referring to them as "local processing," "special intervention," "special handing," and other seemingly legitimate fees.
Without admitting or denying the SEC's allegations, Panalpina consented to the entry of a final judgment ordering disgorgement and permanently enjoining it from violating the FCPA's anti-bribery provisions and aiding and abetting violations of the FCPA's books and records and internal controls provisions. These provisions are codified as Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934. The proposed settlement is subject to court approval.
The Department of Justice today filed a criminal information charging PWT with conspiring to violate and violating the anti-bribery provisions of the FCPA. The department and PWT agreed to resolve the charges by entering into a deferred prosecution agreement. The department also filed a criminal information charging Panalpina with conspiring to violate the books and records provisions of the FCPA and with aiding and abetting certain customers' violations of the books and records provisions of the FCPA. Panalpina agreed to plead guilty to the charges. The agreements require the payment of a $70,560,000 criminal penalty.
The SEC acknowledges and appreciates the assistance of the Department of Justice's Fraud Section and the Federal Bureau of Investigation.
The SEC's investigation is continuing.
See Also: SEC Complaint