• Global Anti-Corruption Practice

Case Detail

United States v. Panasonic Avionics Corporation (D.D.C. 2018)


Case Details
  • Case Name
  • United States v. Panasonic Avionics Corporation (D.D.C. 2018)
  • Date Filed
  • 04/30/2018
  • Enforcement Agency
  • DOJ
  • Foreign Official
  • Unnamed executive of state-owned airline in unspecified Middle East country.
  • Date of Conduct
  • 2007 to 2013
  • Nature of Business
  • Panasonic Corporation, a Japanese corporation, is a multinational corporation that manufactures and sells electronics in the consumer, housing, and automotive industries. Until 2013, the company maintained stock that was registered with the SEC under Section 12(b) of the Exchange Act and traded on the New York Stock Exchange. From May 1, 2015 to June 20, 2016, Panasonic’s securities were registered with the Commission under Section 12(g) of the Exchange Act.

    Panasonic’s wholly owned subsidiary, Panasonic Avionics Corporation (“PAC”), is a Delaware corporation that designs, engineers, manufactures, sells, and installs in-flight entertainment systems and global communication services to airlines. PAC’s books and records were consolidated with Panasonic’s during the relevant time.
  • Influence to be Obtained
  • According to the DOJ, throughout the relevant period PAC improperly recorded payments to an executive (“Foreign Official”) of a state-owned airline in the Middle East (“Middle East Airline”). The DOJ alleged that during the course of negotiating a lucrative contract with the Middle East Airline, PAC executives also were negotiating a consulting position at PAC for the Foreign Official. Once the Foreign Official was installed in the consulting position with PAC, he received $875,000 for “little work,” but PAC recorded the payments as legitimate consulting expenses.
     
    The DOJ also alleged that PAC hired a consultant (“Domestic Airline Consultant”) who was already working as a consultant for a domestic airline (“Domestic Airline”). The Domestic Airline Consultant then allegedly used his position to pass confidential, non-public business information about the Domestic Airline to PAC. PAC allegedly paid the Domestic Airline Consultant
    $825,000, which PAC improperly recorded in its books and records as legitimate consulting expenses, even though the services lacked sufficient substantiation.
     
    More broadly, the DOJ also alleged that PAC made payments to sales agents in Asia who did not pass PAC’s compliance due diligence through another sales agent as a means of disguising the payments. Further, PAC allegedly used
    funds allocated to the Office of the President Budget to pay its sales agents, but the fund was to subject to oversight or adequate controls to ensure the funds were used for their intended purposes.
  • Enforcement
  • On April 30, 2018, the DOJ entered into a deferred prosecution agreement with PAC for causing Panasonic to violate the FCPA’s books-and-records provision. According to the deferred prosecution agreement, PAC agreed to pay a monetary penalty in the amount of $137,403,812 and hire an independent compliance monitor.
     
    On the same day, the SEC issued a cease-and-desist order against Panasonic, pursuant to which it paid $143,199,019 in disgorgement and pre-judgment interest to settle charges against it for violations of the FCPA’s anti-bribery, books-and-records, and internal controls provisions.
  • Amount of the Value
  • Not stated.
  • Amount of Business Related to Payment
  • Not stated.
  • Intermediary
  • Sales agent.
  • Citizenship of Parent Entity
  • United States
  • Total Sanction
  • $ 137,403,812
  • Compliance Monitor
  • Yes
  • Reporting Requirements
  • No
  • Case is Pending?
  • No
  • Total Combined Monetary Sanction
  • $ 280,602,831
  • Industries
  • Computers/Information Technology
  • Regions
  • Middle East
Defendants

Panasonic Avionics Corporation

  • Citation
  • United States v. Panasonic Avionics Corp., No. 1:18-cr-00118 (D.D.C. 2018).
  • Date Filed
  • 04/30/2018
  • Filed Under Seal
  • No
  • FCPA Statutory Provision
    • Books-and-Records
  • Other Statutory Provision
  • None. 
  • Disposition
  • Deferred Prosecution Agreement
  • Defendant Jurisdictional Basis
  • Domestic Concern
  • Defendant's Citizenship
  • United States
  • Individual Sanction
  • $137,403,812.
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