Goodyear Tire & Rubber Company today reached a $16 million settlement with the Securities and Exchange Commission to resolve charges that it violated the Foreign Corrupt Practices Act when its subsidiaries paid bribes to land tire sales in Kenya and Angola.
The SEC said the settlement amount “reflects the company’s self-reporting, prompt remedial acts, and significant cooperation with the SEC’s investigation.” Goodyear neither admitted nor denied the SEC’s findings.
According to the SEC, Goodyear failed to prevent or detect more than $3.2 million in bribes during a four-year period due to inadequate FCPA compliance controls at its subsidiaries in sub-Saharan Africa. Bribes generally were paid in cash to employees of private companies or government-owned entities, as well as other local authorities, such as police or city council officials.
Goodyear then falsely recorded these improper payments as legitimate business expenses in the books and records of the subsidiaries, which were consolidated into Goodyear’s books and records.
“Public companies must keep accurate accounting records, and Goodyear’s lax compliance controls enabled a routine of corrupt payments by African subsidiaries that were hidden in their books,” said Scott Friestad, Associate Director of the SEC’s Enforcement Division. “This settlement ensures that Goodyear must forfeit all of the illicit profits from business obtained through bribes to foreign officials as well as employees at commercial companies in Angola and Kenya.”
According to the SEC, Goodyear’s subsidiary in Kenya bribed employees of the Kenya Ports Authority, Armed Forces Canteen Organization, Nzoia Sugar Company, Kenyan Air Force, Ministry of Roads, Ministry of State for Defense, East African Portland Cement, and Telkom Kenya.
Goodyear’s subsidiary in Angola bribed employees of the Catoca Diamond Mine, which is owned by a consortium of mining interests, including Angola’s national mining company Endiama, and Russian mining company ALROSA. Others bribed in Angola worked at UNICARGAS, Engevia Construction and Public Works, Electric Company of Luanda, National Service of Alfadega, and Sonangol.
Goodyear agreed to pay $14.1 million in disgorgement, which comprises the company’s illicit profits in Kenya and Angola, and $2.1 million in prejudgment interest. Goodyear also must report its FCPA remediation efforts to the SEC for a three-year period.