Goodyear Settles SEC FCPA Charges
Goodyear Tire and Rubber Company settled FCPA books and records and internal control charges with the SEC. The settlement reflects the extensive cooperation and remedial efforts of the company. In the Matter of Goodyear Tire and Rubber Company, Adm. Proc. File No. 3-16400 (February 24, 2015).
The action focuses on the period from 2007 through 2011 and involves the payment of bribes by two subsidiaries, one in Kenya and the other in Angola. In Kenya the company acquired a local business by purchasing a minority stake in 2002 and later taking control. During the period the management regularly authorized and paid bribes to employees of government owned or affiliated entities and private companies to obtain business.
The scheme began before Goodyear acquired the firm. The general manager and finance director conducted the scheme. They approved payments for phony promotional products in cash. The staff of the subsidiary then used the cash to make improper payments to employees of customers which included government and private entities. Overall about $1.5 million in bribes were paid in connection with the sale of tires. Goodyear did not detect or prevent the payments because it failed to conduct adequate due diligence when acquiring the firm.
In Angola the company set up a subsidiary in 2007 Over the same time period the subsidiary paid over $1.6 million in bribes to employees of government owned or affiliated entities and private companies to obtain tire sales. The bribes were paid to a variety of entities.
The former general manager of the subsidiary instituted the scheme. To conceal the payments the firm falsely marked-up the costs of its tires by adding to the invoice price phony freight and customs clearing costs. The scheme was not detected because Goodyear failed to implement adequate FCPA compliance training and controls over the subsidiary. The Order alleges violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B).
The SEC acknowledged the extensive cooperation of the firm. This included halting the payments after learning about them and reporting to the Commission. Significant cooperation was provided to the Commission staff. The firm also divested its ownership of the subsidiary in Kenya and is in the process of selling its subsidiary in Angola. In addition, Goodyear undertook disciplinary action against certain employees and implemented improvements to its compliance programs.
To resolve the proceeding the firm consented to the entry of a cease and desist order based on the Sections cited in the order. It also agreed to pay disgorgement of $14,122,525 along with prejudgment interest. No penalty was imposed in view of Goodyear’s cooperation. The firm will, however, report to the Commission for three years and submit a report within one year which includes a complete description of its FCPA and anti-corruption remedial efforts.