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In the Matter of The Goodyear Tire & Rubber Company

 
:
The Goodyear Tire & Rubber Company
:
SEC Civil
:
February 24, 2015
:
In the Matter of The Goodyear Tire & Rubber Company
:
In the Matter of The Goodyear Tire & Rubber Company, Admin. Pro. File No. 3-16400 (2015)
:
Goodyear agreed to pay approximately $16 million in sanctions in order to settle charges for the acts of rogue managers at the company’s Kenyan and Angolan subsidiaries.

The SEC choose not to charge the company with violations of the FCPA's anti-bribery provions but instead, charged the company with books-and-records and internal controls violations.
:
Wholesale Trade - Durable Goods
:
Angola, Kenya
:
2007; 2008; 2009; 2010; 2011
:
Employees of various Kenyan government-owned or affiliated entities; Kenyan local city council members, police, and tax authorities; Employees of various Angolan government-owned or affiliated entities; Angolan police and tax authorities.
:
The Goodyear Tire & Rubber Company is an Akron, Ohio based tire manufacturer with stock listed on the NASDAQ exchange. According to the SEC’s cease-and-desist order, from 2007 until 2011, Goodyear’s subsidiaries in Kenya and Angola engaged in the practice of paying bribes to various government officials in exchange for business.

In Kenya, the SEC claims that managers of Goodyear’s majority-owned subsidiary, Treadsetters’, paid bribes totaling approximately $1.5 million to employees of several Kenyan government-owned or affiliated entities. According to the SEC, Treadsetters’ managers also paid $14,457 in improper payments to local government officials including city council members, local police, and tax authorities.

The bribery scheme was allegedly organized by Treadsetter managers who approved phony promotion payments and directed the company’s finance department to issue checks to cash. Once the checks were cashed, the payments were allegedly used as bribes but were recorded as promotional expenses on the company’s books and records.

In Angola, the SEC claims that a manager of Goodyear’s subsidiary, Trentyre, paid $1.6 million in bribes to employees of Angolan government owned and affiliated entities and another $64,713 to local police and tax authorities. According to the SEC, to generate the funds for the improper payments, Trentyre falsely marked-up the cost of its tires by adding a phony freight and customs clearing costs. Although the mark-ups were recorded as freight and customs clearing costs on the company’s books-and-records, the SEC alleges that they were used as bribes.

After Goodyear discovered and disclosed the payments to the SEC, the SEC announced on February 24, 2015 that the Commission and Goodyear had settled potential charges in a cease-and-desist order. According to the order, Goodyear agreed to pay a total corporate sanction of $16,228,065.
:
Books and records (Issuer), Internal controls (Issuer)
:
Cease and Desist
:
Goodyear agreed to pay disgorgement of $14,122,525 and prejudgment interest of $2,105,540.
:
16,228,065
:
0
:
Issuer
:
U.S.
:
United States
:
Contract Procurement/Retention, Other Business Advantage
:
Not stated.
:
Cash, Wire/check
:
Subsidiary Company
:
3,200,000
:
Angola, Kenya
:
No
:
Yes