SEC Sues Tyson Foods Over Bribery with Mexican Veterinarians

Jack Humphrey, Regulatory journalist
February 10, 2011 /

For over two years, a Mexican subsidiary of Tyson Foods Inc. has been paying two ghost employees to conceal the illicit payments it made for Mexican government veterinarians who certified their chicken products for export.

The Securities and Exchange Commission has charged the food company for violating the Foreign Corrupt Practices Act (FCPA) in a complaint filed in federal court in the District of Columbia. Tyson Foods agreed to settle the charges of SEC and would pay more than $5 million.

According to the lawsuit, from 2004 to 2006 Tyson Foods used the names of the Mexican veterinarians’ wives who did not perform any services to cover up the illicit payments for the veterinarians themselves. Later on, the names of the wives were removed from the payroll and the payments were reflected in the invoices as ‘services’. The total payments have reached $100,311.

“Tyson and its subsidiary committed core FCPA violations by bribing government officials through no-show jobs and phony invoices, and by having a lax system of internal controls that failed to detect or prevent the misconduct,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

Tyson Foods counsels ordered to stop the payments when they learned of the illegal conduct.

The SEC concluded that “Tyson Foods failed to keep accurate books and records and failed to implement a system of effective internal controls to prevent the salary payments to phantom employees and the payment of illicit invoices.”

The complaint is the second in a series of FCPA violations-related charges this month filed by the SEC against firms that bribed foreign governments to obtain favor for their business.

Early this month, the SEC has also charged Maxwell Technologies Inc. for bribing Chinese officials to close the business deals with Chinese stated-owned firms.

As in what it has concluded with the case of Tyson Foods, the SEC said the misconduct was the result of an ineffective internal control systems within Maxwell.

 

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