Dun & Bradstreet Corp. has agreed to pay more than $9 million to resolve Foreign Corrupt Practices Act charges arising from improper payments made by two Chinese subsidiaries, according to a statement from the Securities and Exchange Commission issued this week.
The business data company also announced that it had received a letter from the Department of Justice noting that the agency has declined to prosecute the company for FCPA violations as part of its pilot program to promote voluntary disclosure of violations. It is the first company to avoid criminal charges under the U.S. Justice Department policy on self-reporting instances of bribery.
According to the SEC’s order, the two Chinese subsidiaries used third-party agents to make unlawful payments to obtain data vital to Dun & Bradstreet’s business as a provider of business financial information. One subsidiary, part of a joint venture with a Chinese company, acquired non-public financial statement information on Chinese entities, in violation of Chinese law, by making unlawful payments to Chinese government officials. The second subsidiary made improper payments to third parties to acquire non-public personal data in violation of Chinese law that was used in its products and also made improper payments to obtain specific business. These improper payments were falsely recorded as legitimate business expenses.
Despite concerns raised during pre-acquisition due diligence efforts, Dun & Bradstreet failed to take appropriate action to stop the improper payments or the false entries into the subsidiary’s books and records, which continued for several years after the acquisition was completed.
“Based upon the information known to the Department at this time, we have declined prosecution consistent with the FCPA Corporate Enforcement Policy,” the DOJ said in a letter Monday. “We have reached this conclusion despite the bribery committed by company’s subsidiaries in China.”
The policy, announced in November by Deputy Attorney General Rod Rosenstein, stems from a pilot program that began in early 2016. It includes a “presumption” prosecutors won’t act against companies that voluntarily disclose their wrongdoing, cooperate with investigators, and take the steps needed to prevent a recurrence, such as beefed up FCPA compliance programs.
The SEC’s order, however, found that Dun & Bradstreet violated sections of the Securities Exchange Act of 1934. Without admitting or denying the allegations, the company agreed to pay disgorgement of $6 million, prejudgment interest of $1 million, and a civil penalty of $2 million.