In the Matter of Ball Corporation, SEC Administrative Proceeding File No. 3-14305 (2011)
Manufacturing - Packaging
Customs officials in Argentina.
In 2006, Ball Corporation, a manufacturer of metal packaging for beverage, food, and household products based in Broomfield, Colorado, acquired the Argentinian company Formametal. According to the SEC's findings, Ball discovered that its newly acquired company had in the past made questionable payments associated with Argentinian customs. Despite this knowledge, Ball allegedly undertook insufficient remedial steps to ensure that illegal payments would not take place in the future.
According to the SEC, from July 2006 until October 2007, Formametal's senior officials authorized at least ten unlawful payments to Argentinian government officials, totaling approximately $106,749.
First, Formametal allegedly paid bribes in excess of $100,000 to circumvent Argentinian law prohibiting the importation of used equipment and parts. Formametal disguised the alleged bribes as customs fees by detailing them on customs agents' invoices and identifying them as "customs advice" or "professional fees" which were booked to an "other expenses" account or to accounts associated with the related equipment.
Second, in October 2007, Formametal allegedly authorized the payment of bribes in an attempt to gain government approval to export copper scrap metal at reduced tariffs. After six months of attempts to secure the waiver legitimately, the Vice President of Institutional Affairs allegedly paid five bribes to customs officials through third-party customs agents to avoid payment of tariffs; Formametal reimbursed the executive by giving him a car.
To disguise the bribe, Formametal allegedly booked the transfer of the car as an interest expense. When Ball discovered that the car was reimbursement for a bribe, it allegedly rebooked the transfer as a miscellaneous expense.
Books and records (Issuer), Internal controls (Issuer)