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Bribery by Oil Services and Freight Forwarding Companies / Panalpina, Inc.
Bribery by Oil Services and Freight Forwarding Companies
Securities and Exchange Commission
Angola, Brazil, Kazakhstan, Nigeria, Russia, and other unspecified countries
Bribery of foreign officials, Falsification of books and records, Internal controls violations, Aiding and abetting the bribery of foreign officials, Aiding and abetting the falsification of books and records
No admission or denial of alleged offenses
According to the US Securities and Exchange Commission Litigation Release, on November 4, 2010, the Commission "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. [ ] 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.
Report by the United States to the OECD, "Steps taken to implement and enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions" (June 2011), Bribery by Oil Services and Freight Forwarding Companies Case Summary at 32-37, accessed at http://www.oecd.org/dataoecd/18/8/42103833.pdf. US Securities and Exchange Commission, Litigation Release No. 21727 / 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 Foreign Corrupt Practices Act," accessed at http://www.sec.gov/litigation/litreleases/2010/lr21727.htm; Complaint accessed at http://www.sec.gov/litigation/complaints/2010/comp21727.pdf
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