Food processing giant Archer Daniels Midland Company has agreed to pay a total of $54.3 million to the Securities and Exchange Commission and the Department of Justice to settle civil and criminal charges over violations of the Foreign Corrupt Practices Act. The company's swift actions, however, also earned it a non-prosecution agreement.

On Dec. 20, Alfred C. Toepfer International Ukraine (ACTI Ukraine), a subsidiary of ADM, pleaded guilty in the Central District of Illinois and agreed to pay $17.8 million in criminal fines to resolve charges that it paid bribes through vendors to Ukrainian government officials to obtain value-added tax (VAT) refunds in violation of the FCPA.

In a parallel action, ADM also agreed to pay $36.5 million in disgorgement and prejudgment interest to the SEC. The final judgment also permanently enjoins ADM from violating those sections of the Exchange Act, and requires the company to report on its FCPA compliance efforts for a three-year period. 

According to the charges, from 2002 to 2008, ACTI Ukraine, a trader and seller of commodities, together with Alfred C. Toepfer International (ACTI Hamburg), another subsidiary of ADM, paid third-party vendors to pass on bribes to Ukrainian government officials to obtain VAT refunds. In total, ACTI Ukraine and ACTI Hamburg paid roughly $22 million to two vendors, nearly all of which was to be passed on to Ukrainian government officials to obtain over $100 million in VAT refunds, resulting in a benefit to ACTI Ukraine and ACTI Hamburg of roughly $41 million.

According to the SEC, the misconduct went unchecked by ADM for several years, because of its deficient and decentralized system of FCPA oversight over subsidiaries in Germany and Ukraine. “ADM's lackluster anti-bribery controls enabled its subsidiaries to get preferential refund treatment by paying off foreign government officials,” said Gerald Hodgkins, an associate director in the SEC's Division of Enforcement.  “Companies with worldwide operations must ensure their compliance is vigilant across the globe and their transactions are recorded truthfully.”

Acting Assistant Attorney General Mythili Raman echoed a similar warning. “Combating bribery is, and will remain, a mainstay of the Criminal Division's mission,” he said. “We are committed to working closely with our foreign and domestic law enforcement partners to fight global corruption.”

In addition to the monetary penalty, ADM and ACTI Ukraine also agreed to cooperate with the Justice Department; to periodically report the companies' compliance efforts; and to continue implementing enhanced compliance programs and internal controls designed to prevent and detect FCPA violations.

As a result of ADM's “timely, voluntary and thorough disclosure of the conduct,” the company entered into an NPA with the Justice Department, and will not be required to appoint a compliance monitor. The Justice Department further acknowledged ADM's “extensive cooperation” throughout the investigation.

These efforts included conducting a world-wide risk assessment and corresponding global internal investigation; making numerous presentations to the Justice Department on the status and findings of the internal investigation; voluntarily making current and former employees available for interviews; compiling relevant documents; and taking early and extensive remedial efforts.

The SEC said it similarly took into account ADM's "cooperation and significant remedial measures, including self-reporting the matter, implementing a comprehensive new compliance program throughout its operations, and terminating employees involved in the misconduct."

“In 2008, soon after we became aware of some questionable transactions by a non-U.S. subsidiary, we engaged an outside law firm and an accounting firm to undertake a comprehensive internal investigation,” said ADM Chairman and CEO Patricia Woertz. “In early 2009, we voluntarily disclosed the matter to appropriate U.S. and foreign government agencies and undertook a comprehensive anti-corruption global risk analysis and compliance assessment. We have also implemented internal-control enhancements, and taken disciplinary action, including termination, with a number of employees.”

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