The US-based agricultural and construction equipment company Deere has agreed to a $10 million settlement with the US Securities and Exchange Commission (SEC) over allegations that its Thai subsidiary bribed government agencies to secure contracts.
According to an SEC statement released on Tuesday in Washington, the bribes included services from massage parlors, extravagant international trips, and other improper gifts aimed at securing contracts from government entities.
Wirtgen Thailand, a fully owned subsidiary of Deere, perpetrated these corrupt acts from late 2017 through 2020.
The involved officials were from various state agencies, including the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads, though specific job titles of the recipients were not disclosed.
Additional bribes were directed towards a major Thai construction contractor, referred to in the SEC case summary as “Company A”.
The SEC highlighted that these payments were in direct violation of the subsidiary’s ethical guidelines, which strictly prohibit any form of inducement to sway government officials, a violation punishable under the Foreign Corrupt Practices Act (FCPA) of the United States.
From late 2017 to 2020, the bribes were executed through cash, meals, falsified consulting fees, and tourism trips masked as “factory visits” in Switzerland and other European locations, including inappropriate “entertainment” at massage parlors, according to the SEC.
A detailed SEC report mentions conversations among Wirtgen executives regarding the Departments of Highways and Rural Roads:
“For instance, in April 2019, Wirtgen Thailand’s Managing Director texted the company’s Finance Manager: ‘re DOH … will have candy money for you too, next week. … Re DRR I will have to discuss it again.’ With respect to these cash bribes, the Managing Director instructed the Finance Manager to ‘Liaise with DOH. … Prepare 5 envelopes. And withdraw cash. You may take THB 100,000 first. For use on the delivery date.’”
Deere’s financial penalties include a $4.5 million civil fine, the forfeiture of $4.34 million in improper benefits, and an additional $1.09 million in interest.
The SEC noted that the settlement reflects Deere’s collaborative efforts with the agency, dismissal of employees implicated in the wrongdoing, and enhancements to their compliance protocols and anti-bribery training programs.
“These allegations represent a clear violation of our company policies and ethical standards,” Deere said in a statement. “They are in direct conflict with our core values — particularly our commitment to integrity — and we strongly condemn such practices.”
“After acquiring Wirtgen Thailand in 2017, Deere failed to timely integrate it into its existing compliance and controls environment, resulting in these bribery schemes going unchecked for several years,” said Charles Cain, chief of the FCPA unit at the SEC Enforcement Division.
“This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place.”
