John Deere fined $10M by SEC

Agriculture equipment manufacturer John Deere has reached an approximately $10 million settlement for violating the Foreign Corrupt Practices Act. 

Deere & Co., the corporate entity operating John Deere, was charged by the U.S. Securities and Exchange Commission (SEC) for bribes made to foreign officials by Deere subsidiary Wirtgen Thailand, according to a statement from John Deere obtained by Equipment Finance News on Sept. 16. As a subsidiary of John Deere, Wirtgen customers can also finance equipment through John Deere Financial.

“Upon discovering these issues, we conducted a thorough internal investigation and fully cooperated with the SEC,” Deere said in the statement. 

Wirtgen Thailand’s bribes included cash payments, international travel for government officials and private company employees, and massage parlor visits for an undisclosed total, according to the SEC. 

“Wirtgen Thailand made approximately $4.3 million in profits as a result of these bribes,” according to the SEC’s statement. “The improper payments were inaccurately recorded as legitimate expenses in Deere’s books and records.” 

‘Incredibly modest’ fine

The $10 million is a relatively small fine by the SEC, Robert Luskin, litigation, anti-corruption and Foreign Corrupt Practices Act (FCPA) attorney at Washington-based law firm Paul Hastings, told EFN. 

“Relative to the fines that are assessed, this is incredibly modest,” he said. “There are a whole lot of settlements in nine figures and 10 figures, so, a settlement of this order of magnitude is the opposite of big.” 

For example, Goldman Sachs was fined a total of $2.9 billion, including more than $1 billion to settle with the SEC, over bribes paid to Malaysia and the Emirate of Abu Dhabi beginning in 2012, according to the SEC’s website. Meanwhile, Airbus received a $4 billion in fines from the United States, France and the United Kingdom for bribing Chinese and other foreign officials using third parties between 2008 and 2015. 

Deere’s fine was lower because it focused on an acquired subsidiary’s bribery scheme, Charles E. Cain, chief of the SEC enforcement division’s FCPA unit, said in a statement. 

“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,” Cain said. “This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place.” 

DOJ cracks down on corporate compliance 

The decision against the farm equipment manufacturer is one of the first since the U.S. Department of Justice’s (DOJ) criminal division issued an updated evaluation of corporate compliance programs in March 2023, Luskin said. 

“This is very typical of DOJ where they will often conclude settlements after they’ve issued guidance and say … ‘this is how it operates in practice’ and sometimes people get a gold star and sometimes they get a black star,” he said. “DOJ very much wants to say this is ‘what we’ll do if you’ve done what we expected you to do,’ and conversely, ‘this is what we’re going to do if you don’t,’ and unfortunately for [Deere], Deere was the counter-example.” 

While the actions occurred before Deere owned Wirtgen, the company still accepted the fine and condemned the actions of the responsible parties.  

“These allegations represent a clear violation of our company policies and ethical standards,” Deere said in its statement. “Furthermore, they are in direct conflict with our core values — particularly our commitment to integrity — and we strongly condemn such practices. The individuals involved in this matter are no longer with the company.” 

Shares of Deere & Co. [Nasdaq: DE] were up 0.8% from market open to $397.88 as of market close Sept. 17. The company has a market cap of $107.98 billion.

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