Published February 10, 2011
The Securities and Exchange Commission today charged Tyson Foods Inc. with violating the Foreign Corrupt Practices Act (FCPA) by bribing “two Mexican government veterinarians responsible for certifying its Mexican subsidiary’s chicken products” passed inspection for export sales.
The FCPA of 1977 makes it unlawful to make payments to foreign government officials to either win or retain business. Tyson says in a statement that after it discovered these illicit payments in 2006 after an internal probe, it reported the bribes to the SEC and the Dept. of Justice. Tyson says to settle the matter, it signed a deferred prosecution agreement, which includes paying a penalty of $4 million to the DOJ, and a consent agreement with the SEC involving a 'disgorgement' payment, including interest, of $1.2 million.”
Tyson says in a statement that in early 2007, it “voluntarily reported that improper payments of more than $100,000 had been made by Tyson de México to two Mexican government veterinarians, both directly and through their spouses.”
It says “the payments began years ago, before Tyson acquired an interest in the company that is now called Tyson de México.
Tyson also notes in the statement that “at the time and for several years after Tyson acquired Tyson de México, Mexican law permitted direct payments to the veterinarians because they were 'approved' government veterinarians who could charge a fee for their services to supplement their government income”
It notes though that “when the two became 'official' government veterinarians and started receiving their full salary from the Mexican government, the payments from Tyson de México should have been discontinued.”
The SEC alleges that Tyson de Mexico at first hid improper payments by putting the veterinarians’ wives on its payroll while they performed no services for the company. The wives were later removed from the payroll and payments were then reflected in invoices submitted to Tyson de Mexico by one of the veterinarians for “services,” the SEC says.
Tyson de Mexico paid the veterinarians a total of $100,311, the SEC says. The SEC also says it was not until two years after Tyson Foods officials first learned about the subsidiary’s illicit payments that its counsel instructed Tyson de Mexico to cease making the payments.
“Tyson and its subsidiary committed core FCPA violations by bribing government officials through no-show jobs and phony invoices, and by having a lax system of internal controls that failed to detect or prevent the misconduct,” said Robert Khuzami, Director of the SEC’s Division of Enforcement, in a statement.
According to the SEC’s complaint filed in federal court in the District of Columbia, the scheme occurred during fiscal years 2004 to 2006.