As highlighted in this prior post, in April 2018 the DOJ and SEC announced a parallel Foreign Corrupt Practices Act enforcement action against Japan-based Panasonic Corp. and a U.S. subsidiary Panasonic Avionics Corp. (PAC) pursuant to which the entities agreed to pay $280 million.
According to the government, PAC employees, including senior executive, engaged in a scheme to retain consultants for improper purposes other than providing actual consulting services. In one instance, PAC executives negotiated a consulting position with a senior contracts official at a Middle East airlines at the same time the alleged “foreign official” was involved in negotiating a contract amendment on behalf of the airline with PAC. In other instances, PAC employees concealed use of sales agents in Asia, some of which did not pass PAC’s internal diligence requirements.
As to the origins of the enforcement action, the DOJ stated:
“The Company did not receive voluntary disclosure credit because the Company’s disclosures occurred only after the Securities and Exchange Commission (“SEC”) requested documents from Panasonic related to possible violations of anti-corruption laws and several years after the Company and Panasonic first became aware of the allegations of bribery through a whistleblower complaint and civil lawsuit, which the Company took steps to investigate internally but chose not to voluntarily report to the relevant authorities.”
Yesterday, the SEC announced “an award to a whistleblower totaling more than $28 million in connection with an SEC enforcement action and a related action by another federal agency.” According to the release, “the whistleblower’s information caused both the SEC and the other agency to open investigations that resulted in significant enforcement actions.”
According to the SEC’s order:
“Claimant’s [Whistleblower’s] information prompted staff at the Commission and the Other Agency to begin investigating the Covered Action company’s conduct in a certain country, (2) the record supports that the Covered Action company reported similar improprieties in a different geographical region because of the ongoing Commission and Other Agency investigations, and (3) the Covered Action’s and the Related Action’s charges involved misconduct in geographical regions that were not the subject of the Claimant’s information. Because there is not a strong nexus between the Claimant’s information and the Commission’s and Other Agency’s charges, and the charges were based on information [redacted] and subsequent investigative efforts of the Commission and Other Agency staff and not assistance provided by Claimant, a *** percent ( *** %) award appropriately recognizes Claimant’s level of contribution to the Covered Action and Related Action.”
Pursuant to relevant law, the SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity.
However, this Wall Street Journal states:
“lawyers representing the whistleblower said the award was connected to 2018 bribery settlements involving Panasonic Avionics Corp., a Lake Forest, Calif.-based unit of Panasonic that makes entertainment and communication systems for aircraft. The tipster, who isn’t a Panasonic employee, notified the SEC about alleged wrongdoing at the company in countries in Asia and Europe, prompting the regulator to open the investigation, according to the whistleblower’s lawyers, Christopher Connors of Connors Law Group LLC and Andy Rickman of Rickman Law Group LLP. The award “shows the SEC’s continued commitment to rewarding [Foreign Corrupt Practices Act] whistleblowers under the program,” Messrs. Connors and Rickman said in a statement, noting that this was the third SEC whistleblower award related to FCPA violations their clients received in the past few years. (See here and here for the other matters).”
See here for an FCPA Flash podcast episode with Andy Rickman.