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SEC v. Diebold, Inc.

 
:
Diebold, Inc.
:
SEC Civil
:
October 22, 2013
:
SEC v. Diebold, Inc.
:
SEC v. Diebold, Inc., 1:13-cv-01609 (D.D.C. 2013)
:
Consistent with some earlier settlements, Diebold merely acknowledges its admission of facts in the DOJ settlement, but does not admit to any of the additional facts alleged by the SEC.
:
Manufacturing-Other/Multi
:
China, Indonesia, Russia
:
2005; 2006; 2007; 2008; 2009; 2010
:
Officials of government-owned banks in China and Indonesia
:
Diebold, Inc. is an Ohio company that is a global provider of automated teller machines and bank security systems. It maintains a class of securities that trade on the New York Stock Exchange.

From 2005 to 2010, Diebold, through its agents and subsidiaries, allegedly provides leisure trips, entertainment, and other improper gifts to foreign government officials to obtain and retain business with government-owned banks in China and Indonesia. In addition, Diebold allegedly paid bribes to private banks in Russia, by executing phony service contracts.

In China, the Complaint alleges that Diebold provided trips, entertainment and other improper gifts to state-owned bank officials and employees through Diebold's subsidiary, Diebold Financial Equipment Company (China), Ltd. ("Diebold China"). Diebold executives were allegedly aware of the improper benefits, and at times these executives personally approved the illicit payments and accompanied the government officials on the trips. Diebold paid for leisure trips to destinations such as Disneyland and Universal Studios, Napa Valley, Las Vegas, the Grand Canyon, Hawaii, Rome, Venice, Florence, Stockholm, Australia, New Zealand, Paris, Amsterdam, Frankfurt, Munich, Vienna, Salzburg, Hong Kong, Singapore, Malaysia, and Bali. Diebold China also provided improper gifts, including cash gifts ranging from $100 to over $600, to dozens of officials annually. These expenses were allegedly improperly recorded as training or other legitimate business expenses.

Even after Diebold executives received FCPA training, they took no action to halt the improper practices and instead allegedly took steps to hide the leisure nature of the trips, including providing false information to the company's auditors in China.

In Indonesia, the Complaint alleges that Diebold provided leisure trips and entertainment to state-owned bank officials through its subsidiary, P.T. Diebold Indonesia ("Diebold Indonesia"). The trips were falsely recorded as training costs.

In Russia, the Complaint alleges that Diebold paid bribes to employees of privately-owned banks in Russia through its subsidiary, Diebold Self-Service Ltd. ("Diebold Russia"). The bribes were allegedly funneled through a distributor using phony service contracts, under which the distributor did not perform any services. Rather, the distributor passed along the payments it received under these contracts to employees of private banks to which Diebold Russia was selling Diebold products.

In 2009, Diebold sought to acquire the distributor, its largest independent distributor in Russia and Ukraine. During due diligence, evidence emerged that the distributor potentially had made illicit payments in connection with its business. Diebold continued doing business with the distributor and continued moving forward with the planned acquisition; however, in 2010 evidence emerged that the distributor had funneled bribe payments on behalf of Diebold Russia. This led the company to terminate its business dealings and acquisition plan with the distributor.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Civil Settlement, Compliance Monitor, Disgorgement, Injunction/Cease and desist
:
Disgorgement of $19,719,550 and prejudgment interest of $3,253,392.
:
22,972,942
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
281,000,000
:
Cash, Entertainment, Gifts, Travel
:
Direct, Sales Agent/Consultant, Subsidiary Company
:
1,747,000
:
China, Indonesia, Russia
:
Yes
:
Yes