Panasonic Charged With FCPA and Accounting Fraud Violations
Panasonic Corp. paid over $143 million to settle SEC charges after its U.S. subsidiary, Panasonic Avionics Corp., bribed a government official with a no-work $875,000 consulting role to secure $700 million in contracts and fraudulently recognized $82 million in premature revenue through backdating and misleading auditors, while failing to maintain internal controls.
Panasonic Corp. agreed to pay $143 million to the SEC to resolve charges of FCPA anti-bribery violations and accounting fraud committed by its subsidiary, Panasonic Avionics Corp. (PAC), which paid $875,000 to a government official at a state-owned airline for a no-work consulting position to secure $700 million in business contracts. PAC also fraudulently overstated pre-tax and net income by $82 million in Q2 2012 by backdating a contract and deceiving its auditor, while systematically failing to maintain adequate internal controls and accurate books and records for consultants and agents across Asia and the Middle East. In a related criminal resolution, PAC agreed to pay a $137 million penalty to the U.S. Department of Justice under a deferred prosecution agreement for FCPA books and records violations.
Panasonic Corp. agreed to pay over $143 million to settle SEC charges stemming from widespread FCPA violations and accounting fraud orchestrated by its U.S. subsidiary, Panasonic Avionics Corp. (PAC). PAC bribed a government official at a state-owned airline by offering a lucrative, no-work consulting position worth approximately $875,000, using a third-party vendor to conceal the payments, in exchange for assistance in securing and retaining two contracts valued at over $700 million. To further inflate financial results, PAC fraudulently recognized more than $82 million in revenue for the fiscal quarter ending June 30, 2012, by backdating a contract and providing misleading information to its auditor. The SEC found that Panasonic lacked sufficient internal accounting controls and failed to maintain accurate books and records, enabling systemic bribery and revenue manipulation across its operations in the Middle East and Asia. In a parallel criminal resolution, PAC agreed to pay a $137 million penalty to the U.S. Department of Justice under a deferred prosecution agreement for causing FCPA books and records violations. The SEC emphasized that Panasonic’s compliance policies were inadequately enforced and easily circumvented, highlighting a failure to address corruption risks in global markets with state-owned customers. The investigation involved multiple international regulators, including Japan’s Financial Services Agency and the Swiss Financial Market Supervisory Authority, underscoring the global scope of the misconduct.
Exhibits & Attached Documents (1)
Extracted insights
- $700.00M $700 million $100M–$1B
- $143.00M $143 million $100M–$1B
- $137.00M $137 million $100M–$1B
- $82.00M $82 million $10M–$100M
- $875K $875,000 $100K–$1M
- company panasonic avionics corp.
- company panasonic corp.
- person sufficient internal accounting controls
- agency the sec’s order
- Panasonic Corp. will pay more than $143 million
- Panasonic Avionics Corp. offered a lucrative consulting position to a government official
- Panasonic Avionics Corp. paid approximately $875,000
- Panasonic overstated pre-tax and net income
- Panasonic lacked sufficient internal accounting controls
- Panasonic consented to the SEC’s order
- Panasonic Avionics Corp. would pay a criminal penalty of more than $137 million
The Securities and Exchange Commission today announced that Japan-based Panasonic Corp. will pay more than $143 million to resolve charges of Foreign Corrupt Practices Act (FCPA) and accounting fraud violations involving its global avionics business. According to the SEC’s order, Panasonic’s U.S. subsidiary, Panasonic Avionics Corp. (PAC), a provider of in-flight entertainment and communication systems, offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help PAC in obtaining and retaining business from the airline. At the time it orchestrated the bribery scheme, PAC was negotiating two agreements with the airline valued at more than $700 million. PAC ultimately retained the official and paid approximately $875,000 for a position that required little to no work, using an unrelated third-party vendor to conceal the payments. The SEC’s order also found that Panasonic fraudulently overstated pre-tax and net income by prematurely recognizing more than $82 million in revenue for the fiscal quarter ending June 30, 2012. The fraud was accomplished by PAC backdating an agreement with the airline and providing misleading information to PAC’s auditor. The SEC order further found that Panasonic lacked sufficient internal accounting controls and failed to make and keep accurate books and records in connection with purported consultants retained by PAC, as well as sales agents used to solicit business from state-owned airlines and other customers throughout the Middle East and Asia. “Investors rightfully expect that the companies they invest in will not engage in bribery or fraud,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division. “Issuers must implement effective controls for the selection and engagement of consultants and agents to ensure compliance with anti-bribery statutes.” “Issuers need to ensure that their rules and controls address the specific bribery and corruption risks they face when operating in global markets with customers that are state-owned entities,” said Charles Cain, Chief of the Enforcement Division’s FCPA Unit. “It is not enough for a company merely to set up policies and procedures that are not enforced or are easily circumvented by employees.” Panasonic consented to the SEC’s order finding that it violated the anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions of the Securities Exchange Act of 1934, and ordering it to pay approximately $143 million in disgorgement and pre-judgement interest. In a related matter, the U.S. Department of Justice today announced that PAC would pay a criminal penalty of more than $137 million as part of a deferred prosecution agreement related to causing books and records violations of the FCPA. The SEC’s investigation was conducted by Anik Shah, Dmitry Lukovsky, Mark Yost, Gregory Bockin, and Sonali Singh, and supervised by Mr. Cain, Ms. Chion, Stacy Bogert, and Kristen Dieter. The SEC appreciates the assistance of the Department of Justice Criminal Division’s Fraud Section as well as the Swiss Financial Market Supervisory Authority, Ontario Securities Commission, Securities and Commodities Authority of the United Arab Emirates, Financial Services Agency of Japan, Monetary Authority of Singapore, Securities Commission of Malaysia, Australian Securities & Investments Commission, and the Securities and Exchange Commission of Pakistan.
The Securities and Exchange Commission today announced that Japan-based Panasonic Corp. will pay more than $143 million to resolve charges of Foreign Corrupt Practices Act (FCPA) and accounting fraud violations involving its global avionics business. According to the SEC’s order, Panasonic’s U.S. subsidiary, Panasonic Avionics Corp. (PAC), a provider of in-flight entertainment and communication systems, offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help PAC in obtaining and retaining business from the airline. At the time it orchestrated the bribery scheme, PAC was negotiating two agreements with the airline valued at more than $700 million. PAC ultimately retained the official and paid approximately $875,000 for a position that required little to no work, using an unrelated third-party vendor to conceal the payments. The SEC’s order also found that Panasonic fraudulently overstated pre-tax and net income by prematurely recognizing more than $82 million in revenue for the fiscal quarter ending June 30, 2012. The fraud was accomplished by PAC backdating an agreement with the airline and providing misleading information to PAC’s auditor. The SEC order further found that Panasonic lacked sufficient internal accounting controls and failed to make and keep accurate books and records in connection with purported consultants retained by PAC, as well as sales agents used to solicit business from state-owned airlines and other customers throughout the Middle East and Asia. “Investors rightfully expect that the companies they invest in will not engage in bribery or fraud,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division. “Issuers must implement effective controls for the selection and engagement of consultants and agents to ensure compliance with anti-bribery statutes.” “Issuers need to ensure that their rules and controls address the specific bribery and corruption risks they face when operating in global markets with customers that are state-owned entities,” said Charles Cain, Chief of the Enforcement Division’s FCPA Unit. “It is not enough for a company merely to set up policies and procedures that are not enforced or are easily circumvented by employees.” Panasonic consented to the SEC’s order finding that it violated the anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions of the Securities Exchange Act of 1934, and ordering it to pay approximately $143 million in disgorgement and pre-judgement interest. In a related matter, the U.S. Department of Justice today announced that PAC would pay a criminal penalty of more than $137 million as part of a deferred prosecution agreement related to causing books and records violations of the FCPA. The SEC’s investigation was conducted by Anik Shah, Dmitry Lukovsky, Mark Yost, Gregory Bockin, and Sonali Singh, and supervised by Mr. Cain, Ms. Chion, Stacy Bogert, and Kristen Dieter. The SEC appreciates the assistance of the Department of Justice Criminal Division’s Fraud Section as well as the Swiss Financial Market Supervisory Authority, Ontario Securities Commission, Securities and Commodities Authority of the United Arab Emirates, Financial Services Agency of Japan, Monetary Authority of Singapore, Securities Commission of Malaysia, Australian Securities & Investments Commission, and the Securities and Exchange Commission of Pakistan.