The U.S. Securities and Exchange Commission (SEC) recently announced that Kentucky-based General Cable has agreed to pay over $75 million to resolve parallel SEC and U.S. Department of Justice investigations regarding its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations.
According to the agency, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia and Thailand. At the same time, General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012.
In the FCPA case, General Cable agreed to pay over $55 million in disgorgement and interest to the SEC, as well as a penalty of nearly $20.5 million in a non-prosecution agreement announced by the Justice Department. General Cable must self-report its FCPA compliance efforts for the next three years. General Cable neither admitted nor denied the SEC’s findings while agreeing to pay the $6.5 million penalty to settle the accounting violations.
The SEC also charged Karl J. Zimmer, General Cable’s then-senior vice president responsible for sales in Angola. Zimmer agreed to pay a $20,000 penalty without admitting or denying the SEC’s findings.
The investigation found no personal misconduct by General Cable’s former CEO Gregory B. Kenny and former CFO Brian J. Robinson, who returned $3.7 million and $2.1 million in compensation received from the company during the period when the accounting violations occurred.
Stephanie Avakian, acting director of the SEC Enforcement Division, commented:
General Cable operated globally without the effective compliance programs and internal controls necessary to proactively address corruption risks and accounting errors.