Gartner agreed to pay nearly $2.5 million as part of a settlement with the Securities and Exchange Commission (SEC) addressing alleged violations of the Foreign Corrupt Practices Act (FCPA) in South Africa.
The Connecticut-based technological research and consulting company will pay a $1.6 million civil penalty and disgorgement and prejudgment interest totaling $856,764 for violating the anti-bribery, books and records, and internal accounting controls provisions of the FCPA, according to the SEC’s order published Friday.
Gartner neither admitted nor denied the SEC’s findings.
The details: From December 2014 through August 2015, Gartner “entered into a corrupt arrangement with a private South African company with close ties to South African government officials, knowing or consciously disregarding that all or part of the money paid to the private company would be used to bribe government officials to influence the award of consulting contracts to Gartner,” the SEC said in an administrative proceeding.
Gartner was awarded an approximately $1 million bid in February 2015 by the South Africa Revenue Service (SARS) to assess its information technology systems. The bid did not mention the involvement of the unnamed private company, the SEC said in its order.
In July 2015, Gartner was awarded an approximately $10 million bid for Phase 2 of the assessment, which similarly omitted any mention of the involvement of the private company, the SEC said. Instead, Gartner hired consultants affiliated with the private company to work on the contracts, which a Gartner consulting manager said was necessary to qualify for the contracts under South Africa’s Black empowerment legislation.
“Gartner’s policy regarding the hiring of third-party consultants did not adequately address anti-corruption risks,” the order said. “At the time of the SARS engagement, the company lacked risk-based screening procedures for hiring third-party contractors, had no anti-corruption related vendor onboarding procedures, and lacked adequate monitoring procedures.”
Compliance considerations: Gartner self-disclosed the apparent FCPA violations following press reports in South Africa and cooperated with the SEC’s investigation by “providing regular updates and sharing facts identified in the course of its own internal investigation, making foreign-based employees available for interviews in the United States, and encouraging cooperation by former employees,” the order said.
To remediate the issues highlighted in the order, the company revised and enhanced relevant policies and procedures and training programs, enhanced due diligence procedures, hired more compliance officers, and increased funding for its compliance function.
Gartner did not respond to a request for comment.