Diebold Inc. To Pay $25 Million Criminal Penalty To Resolve Foreign Corrupt Practices Act Investigation
Diebold Inc., the North Canton-based provider of integrated self-service delivery and security systems, including automated teller machines (ATMs), has agreed to pay a $25.2 million penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by bribing government officials in China and Indonesia and falsifying records in Russia in order to obtain and retain contracts to provide ATMs to state-owned and private banks in those countries.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio made the announcement.
The department today filed in U.S. District Court for the Northern District of Ohio a criminal information and a deferred prosecution agreement. The two-count information charges Diebold with conspiring to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s books and records provisions.
“In China, Indonesia and Russia, Diebold chose to pay bribes for business and falsify documents to cover its tracks,” said Acting Assistant Attorney General Raman. “Through its corrupt business practices, Diebold undermined the sense of fair play that is critical for the rule of law to prevail. Today’s action – which holds Diebold accountable for its criminal conduct, while also recognizing its cooperation and voluntary disclosure to the government of its conduct – underscores that fighting global corruption is and will remain a mainstay of the Criminal Division’s mission.”
“Companies that pay bribes to public officials, whether those officials are in Cleveland, in Ohio or overseas, violate the law,” said U.S. Attorney Dettelbach. “Corporate earnings cannot be placed above the rule of law, and today’s penalties – nearly $50 million in all – send the message again, loud and clear, that such conduct is unacceptable. We hope that Diebold will use this opportunity, including the internal controls and compliance monitor required by today’s agreement, to turn the page to a newer and more ethical corporate culture.”
According to court documents, Diebold paid bribes and falsified documents in connection with the sale of ATMs to bank customers in China, Indonesia, and Russia. With respect to China and Indonesia, the court documents allege that from 2005 to 2010, in order to secure and retain business with bank customers, including state-owned and -controlled banks, Diebold repeatedly provided things of value, including payments, gifts, and non-business travel for employees of the banks, totaling approximately $1.75 million. Diebold attempted to disguise the payments and benefits through various means, including by making payments through third parties designated by the banks and by inaccurately recording leisure trips for bank employees as “training.” The court documents also allege that from 2005 to 2009, Diebold created and entered into false contracts with a distributor in Russia for services that the distributor was not performing. The distributor, in turn, used the money that Diebold paid to it, in part, to pay bribes to employees of Diebold’s privately-owned bank customers in Russia in order to obtain and retain ATM-related contracts with those customers.
In addition to the monetary penalty, Diebold agreed to implement rigorous internal controls, cooperate fully with the department, and retain a compliance monitor for at least 18 months. The department agreed to defer prosecution for three years and, if Diebold abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires. The agreement acknowledges Diebold’s voluntary disclosure and extensive internal investigation and cooperation.
In a related matter, Diebold reached a settlement with the SEC and agreed to pay approximately $22.97 million in disgorgement and prejudgment interest. The SEC settlement was filed today.
The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Justin J. Roberts of the Northern District of Ohio. The case was investigated by the FBI’s Cleveland Field Office. The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.