In re World Acceptance

 
 1 
 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 89489 / August 6, 2020 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4158 / August 6, 2020 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-19905 
 
 
In the Matter of 
 
World Acceptance 
Corporation, 
 
Respondent. 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against World Acceptance Corporation (“WAC” or 
“Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
 
 
 

 
 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
Summary 
 
1. This matter concerns violations of the anti-bribery, books and records, and internal 
accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) by World 
Acceptance Corporation, a consumer loan company headquartered in Greenville, South Carolina.  
The bribery scheme took place at WAC’s former wholly-owned subsidiary in Mexico, WAC de 
Mexico, S.A. de C.V. (“WAC Mexico”), which paid approximately $4.1 million USD in bribes, 
directly or through intermediaries, to Mexican government officials and union officials, from at 
least December 2010 through June 2017 to obtain and retain business.    
 
2. WAC failed to make and keep accurate books and records and failed to devise and 
maintain a sufficient system of internal accounting controls necessary to detect and prevent these 
bribe payments.  The bribe payments were inaccurately recorded as legitimate “commission” 
expenses in WAC’s books and records.  WAC failed to implement sufficient internal accounting 
controls over vendor management and accounts payable at WAC Mexico, failed to provide 
reasonable assurances that WAC Mexico had implemented an FCPA policy and was adhering to it, 
failed to provide FCPA training at WAC and WAC Mexico, and lacked sufficient entity level 
controls over WAC Mexico.  In addition, WAC management lacked the appropriate tone at the top 
regarding internal audit and compliance, thereby undermining the effectiveness of those functions. 
 
3. As a result of the bribery scheme, WAC was unjustly enriched by approximately 
$18 million.  
 
Respondent 
 
4. World Acceptance Corporation is a consumer loan company, headquartered in 
Greenville, South Carolina.  WAC’s common stock is registered under Section 12(b) of the 
Exchange Act, and trades on the NasdaqGS under ticker WRLD.  WAC sold its wholly-owned 
subsidiary, WAC Mexico, effective July 1, 2018.  WAC currently does not have any foreign 
subsidiaries, or conduct any business internationally.     
 
 
 
 
 
 
 
                                                
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding.   

 
 3 
Facts 
 
The Bribery Scheme 
 
5. WAC, through its former wholly-owned subsidiary, WAC Mexico, engaged in a 
bribery scheme from at least December 2010 through June 2017, paying approximately $4.1 
million USD ($64 million MXN) in bribes to obtain and retain business related to its Préstamos 
Viva business line (“Viva”).  
 
6. WAC Mexico had two lines of business, Préstamos Avance (“Avance”) and Viva. 
Avance offered small loans directly to consumers, while Viva offered small loans to state and 
federal government employees.  Viva had less collection risk than Avance because government 
employees had greater job security, and loan repayments were automatically deducted from the 
government employee’s paycheck, collected by the unions, and sent to WAC Mexico.  WAC 
Mexico entered into at least 30 Viva contracts with government entities and/or worker unions 
representing government employees, most of whom worked in healthcare and education.  To 
obtain Viva business and to ensure that loan repayments continued to be sent to WAC Mexico in a 
timely manner, WAC Mexico paid monetary bribes to Mexican government officials and union 
officials.   
 
7. The Viva contracts were signed by government officials (e.g., the secretary of 
health or education for a particular state government), and/or union officials (e.g. the general 
secretary of a particular union).  To enter into these contracts, WAC Mexico paid monetary bribes, 
known internally as the “glove,” to Mexican government officials and union officials.  During the 
performance of these contracts, WAC Mexico also made ongoing payments, referred to as “royalty 
payments,” “scholarship,” or “support,” to officials to ensure that loan repayments continued to be 
sent to WAC Mexico in a timely manner.  Regardless of who signed the contracts with WAC 
Mexico, government officials were paid bribes to obtain or retain the ability to make loans to the 
government employees under all of the contracts. 
 
8. The $4.1 million in bribe payments to government officials and union officials were 
paid in cash, a bank deposit into their bank account, or a bank deposit into the bank account of a 
relative or friend of the official.  WAC Mexico also hired third-party intermediaries to assist with 
obtaining business, and make ongoing bribe payments to officials.  These intermediaries kept a 
small portion of the payments as their fee.  One of WAC Mexico’s intermediaries flew to different 
municipalities in Mexico with large bags of cash to pay officials.  Employees at WAC Mexico 
communicated with the intermediaries via email through servers located in the U.S. 
 
9. Of the $4.1 million USD in payments, at least $1.5 million was paid to government 
officials, $580,000 paid to union officials, and $480,000 paid to third party intermediaries who 
used the funds to pay government officials and union officials.  Due to the lack of appropriate 
recordkeeping at WAC Mexico, it is unclear how the remaining $1.5 million in payments were 
split between those made directly to government officials or union officials, or an intermediary 

 
 4 
who used the funds to pay the officials. 
 
WAC’s Inaccurate Books and Records and Insufficient Internal 
Accounting Controls to Detect or Prevent Bribery 
 
10. The bribe payments were inaccurately recorded as legitimate “commission” 
expenses in WAC’s books and records.  WAC and WAC Mexico lacked the internal accounting 
controls sufficient to detect or prevent such payments.  For example, WAC Mexico did not have a 
vendor management system, did not maintain a master list of approved vendors, did not conduct 
formal due diligence on new vendors, and did not have formal procedures or controls in place to 
approve new vendors.  These internal control failures over vendors allowed WAC Mexico to hire 
third party intermediaries to pay bribes to government officials and union officials.   
 
11. In addition, WAC Mexico did not have a sufficient accounts payable system.  
Instead, manual checks were used for payment, which resulted in managers pre-signing blank 
checks, making it impossible to enforce authorization limits in place over payments.  Moreover, 
WAC Mexico manually prepared a monthly spreadsheet that listed the checks paid that month, and 
provided an expense category for each check.  The payments made to government officials and 
union officials were inaccurately categorized as “commission” expenses.  WAC Mexico sent the 
spreadsheet each month to WAC’s accounting department in Greenville, South Carolina without 
invoices or backup support, and WAC failed to require such backup support.  WAC then manually 
coded each expense, including the “commission” expenses, for recording in WAC’s general ledger, 
which was used to prepare WAC’s financial statements.  Another example of the lack of controls 
over accounts payable was the senior vice president of WAC Mexico approved check payments 
with or without invoices, and starting in or about July 2014, WAC increased his authorization limit 
to $1 million MXN (about $75,000 USD) to make payments related to any Viva contract.    
 
12. WAC did not identify the high risk of bribery and corruption in Mexico and did not 
implement sufficient internal accounting controls to address that risk.  Although starting sometime 
in 2013, WAC had an FCPA policy in its corporate compliance manual, there was no effective 
formal monitoring, or internal controls in place, to ensure that WAC Mexico was adhering to that 
policy.  Moreover, neither WAC or WAC Mexico provided FCPA training to its personnel from at 
least December 2010 through October 2017.   
 
13. WAC also lacked entity level controls over WAC Mexico as a result of the lack of 
oversight over personnel in Mexico.   
 
14. Lastly, the tone at the top from WAC management did not support robust internal 
audit and compliance functions, and undermined the effectiveness of those functions.  For 
example, in October 2015 the then-CEO of WAC terminated the vice president of internal audit 
after he raised compliance concerns, including concerns about the lack of internal accounting 
controls at WAC Mexico.  The then-CEO then combined the internal audit function and the 
compliance function into one department under one VP, had the VP report to her, and pressured 
the VP to eliminate staffing and become more “bare-bones,” according to the VP.  Prior to this 

 
 5 
change, both vice presidents of internal audit and compliance had reported directly to the Board of 
Directors and the Audit Committee.  In November 2016, the then-CEO told the internal audit and 
compliance VP that she would now report to the then-general counsel.  Shortly thereafter, the VP 
voiced concerns that the internal audit and compliance functions were not sound, and the then-
CEO terminated her.  The then-general counsel took over as the head of internal audit and 
compliance, even though the general counsel had no prior audit or accounting experience.  WAC’s 
then-CEO also told the then-general counsel and an internal audit director that she did not care 
whether WAC had a “world class [internal] audit function.” 
 
15. After the bribery allegations came to light in March 2017, WAC’s management and 
its independent audit firm reported in WAC’s FYE 2017 Form 10-K (ending March 31, 2017) that 
WAC had material weaknesses in its Internal Control over Financial Reporting (“ICFR”) and, as a 
result, WAC did not maintain effective ICFR.  Specifically, WAC’s independent audit firm 
identified the following material weaknesses: “control design gaps in [WAC’s] accounts payable 
environment related to vendor management and payment processes in Mexico and in [WAC’s] 
entity level control environment related to adherence to U.S. and foreign laws and regulations, 
including the FCPA, and corporate governance of the Mexico operations.”  WAC’s management 
also identified the same material weaknesses.    
 
Legal Standards and Violations 
 
16. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-
and-desist order upon any person who is violating, has violated, or is about to violate any provision 
of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was, 
or would be a cause of the violation, due to an act or omission the person knew or should have 
known would contribute to such violation. 
 
17. As a result of the conduct described above regarding payments to government 
officials, WAC violated Section 30A of the Exchange Act, which prohibits any issuer with a class 
of securities registered pursuant to Section 12 of the Exchange Act, or any officer, director, 
employee, or agent acting on behalf of such issuer, in order to obtain or retain business, from 
corruptly giving or authorizing the giving of, anything of value to any foreign official for the 
purposes of influencing the official or inducing the official to act in violation of his or her lawful 
duties, or to secure any improper advantage, or to induce a foreign official to use his influence with 
a foreign governmental instrumentality to influence any act or decision of such government or 
instrumentality.       
 
18. As a result of the conduct described above related to payments to government 
officials and union officials, WAC violated Section 13(b)(2)(A) of the Exchange Act, which 
requires every issuer with a class of securities registered pursuant to Exchange Act Section 12 to 
make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly 
reflect the transactions and disposition of the assets of the issuer. 
 

 
 6 
19. As a result of the conduct described above related to payments to government 
officials and union officials, WAC violated Section 13(b)(2)(B) of the Exchange Act which 
requires every issuer with a class of securities registered pursuant to Exchange Act Section 12 to 
devise and maintain a system of internal accounting controls sufficient to provide reasonable 
assurances that (i) transactions are executed in accordance with management’s general or specific 
authorization; (ii) transactions are recorded as necessary (I) to permit preparation of financial 
statements in conformity with generally accepted accounting principles or any other criteria 
applicable to such statements, and (II) to maintain accountability for assets; (iii) access to assets is 
permitted only in accordance with management’s general or specific authorization; and (iv) the 
recorded accountability for assets is compared with the existing assets at reasonable intervals and 
appropriate action is taken with respect to any differences. 
  
WAC’s Cooperation and Remedial Efforts 
 
20. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by WAC and cooperation afforded the Commission staff, including 
facilitating witnesses traveling from Mexico to the U.S. for interviews.  WAC’s remedial acts 
included personnel changes made in late 2017 and early 2018, such as terminating the senior vice 
president of WAC Mexico, and WAC’s CEO and general counsel (on terms previously 
disclosed), and in mid-2018 WAC divested itself of WAC Mexico.     
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent WAC’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, WAC cease and desist from 
committing or causing any violations and any future violations of Sections 30A, 13(b)(2)(A) and 
13(b)(2)(B) of the Exchange Act. 
 
 B. WAC shall, within fourteen days of the entry of this Order, pay disgorgement of 
$17,826,000, prejudgment interest of $1,900,000, and civil penalties of $2,000,000, for a total 
payment of $21,726,000 to the Securities and Exchange Commission for transfer to the general 
fund of the United States Treasury, subject to Section 21F(g)(3) of the Exchange Act.  If timely 
payment of disgorgement and prejudgment interest is not made, additional interest shall accrue 
pursuant to SEC Rule of Practice 600.  If timely payment of the civil penalty is not made, 
additional interest shall accrue pursuant to 31 U.S.C. §3717. 
 
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  

 
 7 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
WAC as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to Charles Cain, FCPA Unit Chief, 
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, 
DC 20549.    
 
 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, WAC shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that WAC shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of 
the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 

1 

 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 89489 / August 6, 2020 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4158 / August 6, 2020 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-19905 

 

 

In the Matter of 

 

World Acceptance 

Corporation, 

 

Respondent. 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER 

  

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against World Acceptance Corporation (“WAC” or 

“Respondent”). 

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  

 

 

 



 

 2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

Summary 

 

1. This matter concerns violations of the anti-bribery, books and records, and internal 

accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) by World 

Acceptance Corporation, a consumer loan company headquartered in Greenville, South Carolina.  

The bribery scheme took place at WAC’s former wholly-owned subsidiary in Mexico, WAC de 

Mexico, S.A. de C.V. (“WAC Mexico”), which paid approximately $4.1 million USD in bribes, 

directly or through intermediaries, to Mexican government officials and union officials, from at 

least December 2010 through June 2017 to obtain and retain business.    

 

2. WAC failed to make and keep accurate books and records and failed to devise and 

maintain a sufficient system of internal accounting controls necessary to detect and prevent these 

bribe payments.  The bribe payments were inaccurately recorded as legitimate “commission” 

expenses in WAC’s books and records.  WAC failed to implement sufficient internal accounting 

controls over vendor management and accounts payable at WAC Mexico, failed to provide 

reasonable assurances that WAC Mexico had implemented an FCPA policy and was adhering to it, 

failed to provide FCPA training at WAC and WAC Mexico, and lacked sufficient entity level 

controls over WAC Mexico.  In addition, WAC management lacked the appropriate tone at the top 

regarding internal audit and compliance, thereby undermining the effectiveness of those functions. 

 

3. As a result of the bribery scheme, WAC was unjustly enriched by approximately 

$18 million.  

 

Respondent 

 

4. World Acceptance Corporation is a consumer loan company, headquartered in 

Greenville, South Carolina.  WAC’s common stock is registered under Section 12(b) of the 

Exchange Act, and trades on the NasdaqGS under ticker WRLD.  WAC sold its wholly-owned 

subsidiary, WAC Mexico, effective July 1, 2018.  WAC currently does not have any foreign 

subsidiaries, or conduct any business internationally.     

 

 

 

 

 

 

 

                                                
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding.   



 

 3 

Facts 

 

The Bribery Scheme 

 

5. WAC, through its former wholly-owned subsidiary, WAC Mexico, engaged in a 

bribery scheme from at least December 2010 through June 2017, paying approximately $4.1 

million USD ($64 million MXN) in bribes to obtain and retain business related to its Préstamos 

Viva business line (“Viva”).  

 

6. WAC Mexico had two lines of business, Préstamos Avance (“Avance”) and Viva. 

Avance offered small loans directly to consumers, while Viva offered small loans to state and 

federal government employees.  Viva had less collection risk than Avance because government 

employees had greater job security, and loan repayments were automatically deducted from the 

government employee’s paycheck, collected by the unions, and sent to WAC Mexico.  WAC 

Mexico entered into at least 30 Viva contracts with government entities and/or worker unions 

representing government employees, most of whom worked in healthcare and education.  To 

obtain Viva business and to ensure that loan repayments continued to be sent to WAC Mexico in a 

timely manner, WAC Mexico paid monetary bribes to Mexican government officials and union 

officials.   

 

7. The Viva contracts were signed by government officials (e.g., the secretary of 

health or education for a particular state government), and/or union officials (e.g. the general 

secretary of a particular union).  To enter into these contracts, WAC Mexico paid monetary bribes, 

known internally as the “glove,” to Mexican government officials and union officials.  During the 

performance of these contracts, WAC Mexico also made ongoing payments, referred to as “royalty 

payments,” “scholarship,” or “support,” to officials to ensure that loan repayments continued to be 

sent to WAC Mexico in a timely manner.  Regardless of who signed the contracts with WAC 

Mexico, government officials were paid bribes to obtain or retain the ability to make loans to the 

government employees under all of the contracts. 

 

8. The $4.1 million in bribe payments to government officials and union officials were 

paid in cash, a bank deposit into their bank account, or a bank deposit into the bank account of a 

relative or friend of the official.  WAC Mexico also hired third-party intermediaries to assist with 

obtaining business, and make ongoing bribe payments to officials.  These intermediaries kept a 

small portion of the payments as their fee.  One of WAC Mexico’s intermediaries flew to different 

municipalities in Mexico with large bags of cash to pay officials.  Employees at WAC Mexico 

communicated with the intermediaries via email through servers located in the U.S. 

 

9. Of the $4.1 million USD in payments, at least $1.5 million was paid to government 

officials, $580,000 paid to union officials, and $480,000 paid to third party intermediaries who 

used the funds to pay government officials and union officials.  Due to the lack of appropriate 

recordkeeping at WAC Mexico, it is unclear how the remaining $1.5 million in payments were 

split between those made directly to government officials or union officials, or an intermediary 



 

 4 

who used the funds to pay the officials. 

 

WAC’s Inaccurate Books and Records and Insufficient Internal 

Accounting Controls to Detect or Prevent Bribery 

 

10. The bribe payments were inaccurately recorded as legitimate “commission” 

expenses in WAC’s books and records.  WAC and WAC Mexico lacked the internal accounting 

controls sufficient to detect or prevent such payments.  For example, WAC Mexico did not have a 

vendor management system, did not maintain a master list of approved vendors, did not conduct 

formal due diligence on new vendors, and did not have formal procedures or controls in place to 

approve new vendors.  These internal control failures over vendors allowed WAC Mexico to hire 

third party intermediaries to pay bribes to government officials and union officials.   

 

11. In addition, WAC Mexico did not have a sufficient accounts payable system.  

Instead, manual checks were used for payment, which resulted in managers pre-signing blank 

checks, making it impossible to enforce authorization limits in place over payments.  Moreover, 

WAC Mexico manually prepared a monthly spreadsheet that listed the checks paid that month, and 

provided an expense category for each check.  The payments made to government officials and 

union officials were inaccurately categorized as “commission” expenses.  WAC Mexico sent the 

spreadsheet each month to WAC’s accounting department in Greenville, South Carolina without 

invoices or backup support, and WAC failed to require such backup support.  WAC then manually 

coded each expense, including the “commission” expenses, for recording in WAC’s general ledger, 

which was used to prepare WAC’s financial statements.  Another example of the lack of controls 

over accounts payable was the senior vice president of WAC Mexico approved check payments 

with or without invoices, and starting in or about July 2014, WAC increased his authorization limit 

to $1 million MXN (about $75,000 USD) to make payments related to any Viva contract.    

 

12. WAC did not identify the high risk of bribery and corruption in Mexico and did not 

implement sufficient internal accounting controls to address that risk.  Although starting sometime 

in 2013, WAC had an FCPA policy in its corporate compliance manual, there was no effective 

formal monitoring, or internal controls in place, to ensure that WAC Mexico was adhering to that 

policy.  Moreover, neither WAC or WAC Mexico provided FCPA training to its personnel from at 

least December 2010 through October 2017.   

 

13. WAC also lacked entity level controls over WAC Mexico as a result of the lack of 

oversight over personnel in Mexico.   

 

14. Lastly, the tone at the top from WAC management did not support robust internal 

audit and compliance functions, and undermined the effectiveness of those functions.  For 

example, in October 2015 the then-CEO of WAC terminated the vice president of internal audit 

after he raised compliance concerns, including concerns about the lack of internal accounting 

controls at WAC Mexico.  The then-CEO then combined the internal audit function and the 

compliance function into one department under one VP, had the VP report to her, and pressured 

the VP to eliminate staffing and become more “bare-bones,” according to the VP.  Prior to this 



 

 5 

change, both vice presidents of internal audit and compliance had reported directly to the Board of 

Directors and the Audit Committee.  In November 2016, the then-CEO told the internal audit and 

compliance VP that she would now report to the then-general counsel.  Shortly thereafter, the VP 

voiced concerns that the internal audit and compliance functions were not sound, and the then-

CEO terminated her.  The then-general counsel took over as the head of internal audit and 

compliance, even though the general counsel had no prior audit or accounting experience.  WAC’s 

then-CEO also told the then-general counsel and an internal audit director that she did not care 

whether WAC had a “world class [internal] audit function.” 

 

15. After the bribery allegations came to light in March 2017, WAC’s management and 

its independent audit firm reported in WAC’s FYE 2017 Form 10-K (ending March 31, 2017) that 

WAC had material weaknesses in its Internal Control over Financial Reporting (“ICFR”) and, as a 

result, WAC did not maintain effective ICFR.  Specifically, WAC’s independent audit firm 

identified the following material weaknesses: “control design gaps in [WAC’s] accounts payable 

environment related to vendor management and payment processes in Mexico and in [WAC’s] 

entity level control environment related to adherence to U.S. and foreign laws and regulations, 

including the FCPA, and corporate governance of the Mexico operations.”  WAC’s management 

also identified the same material weaknesses.    

 

Legal Standards and Violations 
 

16. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-

and-desist order upon any person who is violating, has violated, or is about to violate any provision 

of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was, 

or would be a cause of the violation, due to an act or omission the person knew or should have 

known would contribute to such violation. 

 

17. As a result of the conduct described above regarding payments to government 

officials, WAC violated Section 30A of the Exchange Act, which prohibits any issuer with a class 

of securities registered pursuant to Section 12 of the Exchange Act, or any officer, director, 

employee, or agent acting on behalf of such issuer, in order to obtain or retain business, from 

corruptly giving or authorizing the giving of, anything of value to any foreign official for the 

purposes of influencing the official or inducing the official to act in violation of his or her lawful 

duties, or to secure any improper advantage, or to induce a foreign official to use his influence with 

a foreign governmental instrumentality to influence any act or decision of such government or 

instrumentality.       

 

18. As a result of the conduct described above related to payments to government 

officials and union officials, WAC violated Section 13(b)(2)(A) of the Exchange Act, which 

requires every issuer with a class of securities registered pursuant to Exchange Act Section 12 to 

make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly 

reflect the transactions and disposition of the assets of the issuer. 

 



 

 6 

19. As a result of the conduct described above related to payments to government 

officials and union officials, WAC violated Section 13(b)(2)(B) of the Exchange Act which 

requires every issuer with a class of securities registered pursuant to Exchange Act Section 12 to 

devise and maintain a system of internal accounting controls sufficient to provide reasonable 

assurances that (i) transactions are executed in accordance with management’s general or specific 

authorization; (ii) transactions are recorded as necessary (I) to permit preparation of financial 

statements in conformity with generally accepted accounting principles or any other criteria 

applicable to such statements, and (II) to maintain accountability for assets; (iii) access to assets is 

permitted only in accordance with management’s general or specific authorization; and (iv) the 

recorded accountability for assets is compared with the existing assets at reasonable intervals and 

appropriate action is taken with respect to any differences. 

  

WAC’s Cooperation and Remedial Efforts 

 

20. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by WAC and cooperation afforded the Commission staff, including 

facilitating witnesses traveling from Mexico to the U.S. for interviews.  WAC’s remedial acts 

included personnel changes made in late 2017 and early 2018, such as terminating the senior vice 

president of WAC Mexico, and WAC’s CEO and general counsel (on terms previously 

disclosed), and in mid-2018 WAC divested itself of WAC Mexico.     

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent WAC’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, WAC cease and desist from 

committing or causing any violations and any future violations of Sections 30A, 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act. 

 

 B. WAC shall, within fourteen days of the entry of this Order, pay disgorgement of 

$17,826,000, prejudgment interest of $1,900,000, and civil penalties of $2,000,000, for a total 

payment of $21,726,000 to the Securities and Exchange Commission for transfer to the general 

fund of the United States Treasury, subject to Section 21F(g)(3) of the Exchange Act.  If timely 

payment of disgorgement and prejudgment interest is not made, additional interest shall accrue 

pursuant to SEC Rule of Practice 600.  If timely payment of the civil penalty is not made, 

additional interest shall accrue pursuant to 31 U.S.C. §3717. 

 

Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  



 

 7 

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

WAC as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to Charles Cain, FCPA Unit Chief, 

Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, 

DC 20549.    

 

 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, WAC shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that WAC shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of 

the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary 

http://www.sec.gov/about/offices/ofm.htm