Out-of-home advertising company Clear Channel Outdoor Holdings agreed to pay more than $26 million as part of a settlement with the Securities and Exchange Commission (SEC) alleging its former China-based subsidiary bribed government officials to obtain outdoor advertising contracts.

Clear Channel was fined $6 million, in addition to agreeing to disgorge approximately $16.4 million and pay prejudgment interest of approximately $3.8 million, for violating the Foreign Corrupt Practices Act, the SEC announced in a press release Thursday.

The agency cited the company for anti-bribery, recordkeeping, and internal accounting control violations.

The details: From at least 2012 through 2017, Clear Media, a former indirect subsidiary of Clear Channel based in China, bribed Chinese government officials to obtain concession contracts required to sell advertising services to public- and private-sector clients, the SEC said in its order. Clear Media allegedly paid bribes both directly and through third parties, and it used sham intermediaries and false invoices to “generate cash for off-book consultants engaged to win advertising business from government and private customers,” per the order.

Bribes were paid in the form of gift cards, golf clubs, and vases, and Clear Media’s principal executive officer at the time spent “hundreds of thousands of dollars” on government officials for first-class travel, hotel rooms, meals, and entertainment, according to the SEC.

The improper payments earned Clear Channel approximately $16.4 million in benefits recorded as legitimate business expenses in its consolidated books and records, the order stated.

Compliance considerations: During the relevant period, Clear Media’s internal auditors repeatedly reported elevated bribery risk concerns regarding the subsidiary’s compliance program and internal accounting controls, according to the SEC. Clear Channel was faulted by the agency for failing to ensure sufficient internal accounting controls were in place at Clear Media.

In 2018, a Clear Media cashier confessed to Chinese authorities he participated in a decade-long misappropriation scheme. Subsequent investigations and audits into multiple suspicious payments at the company were blocked by the actions of the principal executive, according to the SEC.

By the end of 2019, Clear Channel still couldn’t assure certain payments at Clear Media were made in compliance with anti-corruption laws, per the order.

In March 2020, Clear Channel disposed of its interest in Clear Media.

Clear Channel cooperated with the SEC through sharing facts of its internal investigation, facilitating production and translation of certain documents, and aiding the agency in its interviews of current and former employees. The company enhanced its anti-corruption compliance policies, procedures, and related internal accounting controls regarding third-party due diligence, contracting, payments, and monitoring; gifts, meals, entertainment, and travel; conflicts of interest; and monitoring and remediation of internal audit issues and actions, according to the SEC.

Company response: “Resolving these legacy matters is important to the company, which believes this settlement is in the best interests of the company and its shareholders,” said Clear Channel in a statement. “The company remains deeply committed to promoting a culture of ethical conduct and compliance.”

Clear Channel noted the Department of Justice declined to pursue related charges against the company.

The company neither admitted nor denied the SEC’s findings in reaching settlement.