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SEC v. Delta & Pine Land Company and Turk Deltapine

 
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DeltaPine - Turk Deltapine
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SEC Civil
:
July 25, 2007
:
SEC v. Delta & Pine Land Company and Turk Deltapine
:
SEC v. Delta & Pine Land Company and Turk Deltapine, Inc., No. 1:07-cv-01352 (D.D.C. 2007)
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The conduct which led to this proceeding came to light during M&A due diligence by Monsanto and the M&A transaction was consummated subject to the resolution of this proceeding.

This case offers insight into the government's view of the distinction between facilitations payments and "obtain or retain business" payments. In the end, however, the SEC brought charges based on inaccurate books & records and lack of internal controls.
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Agriculture-Food
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Turkey
:
2001; 2002; 2003; 2004; 2005; 2006
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Officials of the Turkish Ministry of Agricultural and Rural Affairs
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Turk Deltapine settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint.

Delta & Pine is a Delaware corporation engaged in the breeding, production, conditioning, and marketing of cotton planting seed. Turk Deltapine is their wholly owned subsidiary operating in Turkey. In Turkey, officials of the Turkish Ministry of Agricultural and Rural Affairs must inspect all farmers' fields and complete inspection reports before Turk Deltapine may purchase cotton seeds from farmers. The officials must also complete certifications in order to maintain quality control before Turk Deltapine can export the seed for sale. From 2001 to 2006, Turk Deltapine paid approximately $43,000 to these officials in order to obtain these inspection reports and certifications.

The Commission filed both a lawsuit and an administrative proceeding against Turk Deltapine for violations of the anti-bribery provisions of the FCPA. In the administrative proceeding, the SEC ordered Turk Deltapine to cease and desist from violating the FCPA. In the federal lawsuit, Delta & Pine and Turk Deltapine consented, without admitting or denying the allegations, to the entry of a final judgment requiring a $300,000 penalty to be paid jointly and severally.
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Anti-bribery (Issuer)
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Civil penalty, Compliance Monitor, Injunction/Cease and desist
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Civil penalty of $300,000.
:
300,000
:
0
:
U.S.
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License/Permit
:
Not stated.
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Cash, Gifts, Meals, Travel
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Direct
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43,000
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Turkey
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"Facilitation Payment": Delta & Pine's subsidiary, Turk Deltapine, allegedly made numerous small payments to multiple officials of the Turkish Ministry of Agricultural and Rural Affairs to obtain government reports and certifications that were necessary for Turk Deltapine to operate its business in Turkey. Although some of these payments may arguably fall on one side or the other of the "obtain or retain business" nexus, Delta & Pine's liability arose from its alleged failure to account for these payments on its books & records and its alleged failure to maintain a system of internal controls. It is unclear whether the SEC would have brought an action based solely on such small arguably facilitation payments without the books & records and internal controls violations.
:
Yes