The US Securities and Exchange Commission (SEC) has charged Hitachi with violating the Foreign Corrupt Practices Act (FCPA) when it inaccurately recorded improper payments to the ANC in connection with contracts to build two multi-billion dollar power plants.<\/p>\n
The\u00a0Tokyo-based conglomerate has agreed to pay $19 million (R267 million)\u00a0 to settle the SEC charges<\/a>.<\/p>\n The SEC alleged that Hitachi sold a 25% stake in a South African subsidiary to a company serving as a front for the African National Congress (ANC).<\/p>\n This arrangement gave the front company and the ANC the ability to share in the profits from any power station contracts that Hitachi secured., the US body said.<\/p>\n Hitachi was ultimately awarded two contracts to build power stations in South Africa and paid the ANC\u2019s front company approximately $5 million in \u201cdividends\u201d based on profits derived from the contracts.<\/p>\n Through a separate, undisclosed arrangement, Hitachi paid the front company an additional $1 million in \u201csuccess fees\u201d that were inaccurately booked as consulting fees without appropriate documentation, the SEC said.<\/p>\n \u201cHitachi\u2019s lax internal control environment enabled its subsidiary to pay millions of dollars to a politically-connected front company for the ANC to win contracts with the South African government,\u201d said Andrew J. Ceresney, director of the SEC\u2019s Enforcement Division.\u00a0 \u201cHitachi then unlawfully mischaracterized those payments in its books and records as consulting fees and other legitimate payments.\u201d<\/p>\n According to the SEC\u2019s complaint filed in US District Court for the District of Columbia:<\/p>\n Hitachi\u2019s misconduct violated the books and records and internal accounting controls provisions of the federal securities laws, the SEC said.<\/p>\n Without admitting or denying the SEC\u2019s allegations, Hitachi agreed to a settlement that would require the company to pay a $19 million penalty, and it would be permanently enjoined from future violations.<\/p>\n The settlement is subject to court approval.<\/p>\n \u201cWe particularly appreciate the assistance we received from the African Development Bank\u2019s Integrity and Anti-Corruption Department and hope this is the first in a series of collaborations,\u201d said Kara Brockmeyer, chief of the SEC Enforcement Division\u2019s FCPA Unit.<\/p>\n Why South Africa should steer clear of nuclear<\/a><\/strong><\/p>\n\n
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