Tractor maker Deere settles SEC probe into alleged cash and massage parlour bribes - Financial Times

[Susannah Savage in London]

The SEC found Deere in violation of the Foreign Corrupt Practices Act, specifically in relation to the company’s books, records and internal accounting controls © Tom Williams/CQ-Roll Call Inc/Getty Images

Tractor maker Deere has agreed to pay $10mn to settle charges brought by the US Securities and Exchange Commission over allegations that a Thai subsidiary bribed local officials with cash, foreign travel and visits to massage parlours.

According to the SEC, between late 2017 and 2020, senior managers and employees at Deere’s Wirtgen Thailand unit engaged in commercial bribery and made “improper” payments to officials at government agencies including the Royal Thai Air Force and Thailand’s Department of Highways.

In a bid to win tenders, the unit offered cash and sham consulting fees as well as taking the officials on overseas sightseeing trips disguised as factory visits and providing massage parlour “entertainment”.

According to the SEC, these payments were allegedly made in direct violation of the company’s code of conduct, which explicitly forbade giving “absolutely anything” to improperly influence government officials.

During the three-year period, Wirtgen Thailand won multiple million-dollar contracts from the government entities, such as a $2.3mn deal with the Department of Highways in December 2018.

In October 2019, Deere spent close to $50,000 taking four officials from the department and their wives to Germany, ostensibly to visit a factory. The itinerary for the visit, however, included no factory visits and instead “shopping and touring in the Alps”.

The SEC found Deere in violation of the Foreign Corrupt Practices Act, specifically in relation to the company’s books, records and internal accounting controls.

The settlement announced on Tuesday includes a $4.5mn civil penalty, $4.3mn in disgorgement of improperly obtained profits and $1.1mn in interest. The resolution takes into account Deere’s co-operation with the SEC’s investigation, the dismissal of employees involved in the misconduct, and improvements to its compliance and anti-bribery training programmes.

The tractor maker conducted a “thorough internal investigation and fully co-operated with the SEC”, it said in a statement. “These allegations represent a clear violation of our company policies and ethical standards. Furthermore, they are in direct conflict with our core values — particularly our commitment to integrity — and we strongly condemn such practices.”

In February Deere, the world’s largest farm equipment company, cut its 2024 profit forecast as farmers faced with higher borrowing costs and lower crop prices showed less willingness to fork out for expensive agricultural machinery.