Wire and Cable Manufacturer Settles FCPA and Accounting Charges
General Cable Corporation paid over $81.5 million to resolve parallel SEC and DOJ investigations for FCPA violations involving bribes to officials in six countries over 12 years and accounting fraud from improper inventory reporting in Brazil, with a former VP fined $20,000 and former CEO/CFO returning $5.8 million in compensation without charges.
General Cable Corporation agreed to pay more than $81.5 million to settle parallel investigations by the SEC and DOJ, including $55 million in disgorgement and interest and a $20.5 million penalty for FCPA violations related to improper payments to government officials in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand over a 12-year period. The company also paid an additional $6.5 million penalty to resolve accounting violations stemming from material misstatements in its financial statements from 2008 to mid-2012 due to faulty inventory accounting at its Brazilian subsidiary. Former Senior VP Karl J. Zimmer was fined $20,000 for circumventing internal controls, while former CEO Gregory Kenny and CFO Brian Robinson returned $3.7 million and $2.1 million in compensation, respectively, with no personal misconduct found, avoiding Sarbanes-Oxley clawbacks.
General Cable Corporation agreed to pay over $81.5 million to resolve parallel investigations by the SEC and DOJ for violations of the Foreign Corrupt Practices Act and accounting fraud. Its overseas subsidiaries made improper payments to government officials in six countries—Angola, Bangladesh, China, Egypt, Indonesia, and Thailand—over a 12-year period to secure and retain business, facilitated by weak internal controls and inadequate compliance programs. Separately, the company’s Brazilian subsidiary engaged in improper inventory accounting that caused material misstatements in its financial reports from 2008 through the second quarter of 2012. To settle the FCPA charges, General Cable paid $55 million in disgorgement and interest and a $20.5 million penalty under a non-prosecution agreement with the DOJ, while paying an additional $6.5 million to resolve the accounting violations without admitting or denying wrongdoing. Former Senior Vice President Karl J. Zimmer was individually fined $20,000 for knowingly circumventing internal controls and enabling bribery, while former CEO Gregory Kenny and former CFO Brian J. Robinson returned $3.7 million and $2.1 million in compensation, respectively, as the SEC found no personal misconduct, making clawbacks unnecessary. General Cable must self-report its FCPA compliance efforts for three years, and the SEC credited its cooperation, self-reporting, and remedial actions in determining the settlement terms. The investigation, which involved collaboration with the DOJ, FBI, and Portuguese Securities Market Commission, remains ongoing for other potential violations.
Exhibits & Attached Documents (3)
Extracted insights
- $75.00M $75 million $10M–$100M
- $55.00M $55 million $10M–$100M
- $20.50M $20.5 million $10M–$100M
- $6.50M $6.5 million $1M–$10M
- $3.70M $3.7 million $1M–$10M
- $2.10M $2.1 million $1M–$10M
- $20K $20,000 $10K–$100K
- company $2.1 million in compensation received from the company
- company $3.7 million in compensation received from the company
- agency an additional $6.5 million penalty to the sec
- person brian j. robinson
- person general cable
- company general cable corporation
- person gregory b. kenny
- person karl j. zimmer
- agency more than $55 million in disgorgement and interest to the sec
- agency Securities and Exchange Commission
- Securities and Exchange Commission announced General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations
- General Cable Corporation agreed to pay an additional $6.5 million penalty to the SEC
- General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand
- General Cable’s weak internal controls failed to detect improper inventory accounting at its Brazilian subsidiary
- General Cable operated globally without the effective compliance programs and internal controls necessary to proactively address corruption risks and accounting errors
- General Cable agreed to pay more than $55 million in disgorgement and interest to the SEC
- General Cable agreed to pay a penalty of nearly $20.5 million in a non-prosecution agreement announced by the Justice Department
- General Cable must self-report its FCPA compliance efforts for the next three years
- Karl J. Zimmer agreed to pay a $20,000 penalty
- Gregory B. Kenny returned $3.7 million in compensation received from the company
- Brian J. Robinson returned $2.1 million in compensation received from the company
The Securities and Exchange Commission today announced that Kentucky-based General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations related to its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations. According to the SEC’s orders instituting settled administrative proceedings, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand. General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012. “General Cable operated globally without the effective compliance programs and internal controls necessary to proactively address corruption risks and accounting errors,” said Stephanie Avakian, Acting Director of the SEC Enforcement Division. In the FCPA case, General Cable agreed to pay more than $55 million in disgorgement and interest to the SEC as well as a penalty of nearly $20.5 million in a non-prosecution agreement announced today by the Justice Department. General Cable must self-report its FCPA compliance efforts for the next three years. General Cable neither admitted nor denied the SEC’s findings while agreeing to pay the $6.5 million penalty to settle the accounting violations. The SEC considered General Cable’s self-reporting, cooperation, and remedial acts when determining the settlements. The SEC also charged Karl J. Zimmer, General Cable’s then-senior vice president responsible for sales in Angola. Zimmer agreed to pay a $20,000 penalty without admitting or denying the SEC’s findings that he knowingly circumvented internal accounting controls and caused FCPA violations when he approved certain improper payments. The SEC’s investigation found no personal misconduct by General Cable’s former CEO Gregory B. Kenny and former CFO Brian J. Robinson, who returned $3.7 million and $2.1 million in compensation received from the company during the period when the accounting violations occurred. Therefore, it wasn’t necessary for the SEC to pursue a clawback action under Section 304(a) of the Sarbanes-Oxley Act. The SEC’s investigation, which is continuing, is being conducted by Rachel Nonaka, Mark Oh, Colin Rand, Eric Hubbs, David Johnson, and Olivia Choe. The case is being supervised by Anita Bandy, Kristen Dieter, and Bridget Fitzpatrick. The SEC appreciates the assistance of the U.S. Department of Justice, Federal Bureau of Investigation, and Portuguese Securities Market Commission.
The Securities and Exchange Commission today announced that Kentucky-based General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations related to its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations. According to the SEC’s orders instituting settled administrative proceedings, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand. General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012. “General Cable operated globally without the effective compliance programs and internal controls necessary to proactively address corruption risks and accounting errors,” said Stephanie Avakian, Acting Director of the SEC Enforcement Division. In the FCPA case, General Cable agreed to pay more than $55 million in disgorgement and interest to the SEC as well as a penalty of nearly $20.5 million in a non-prosecution agreement announced today by the Justice Department. General Cable must self-report its FCPA compliance efforts for the next three years. General Cable neither admitted nor denied the SEC’s findings while agreeing to pay the $6.5 million penalty to settle the accounting violations. The SEC considered General Cable’s self-reporting, cooperation, and remedial acts when determining the settlements. The SEC also charged Karl J. Zimmer, General Cable’s then-senior vice president responsible for sales in Angola. Zimmer agreed to pay a $20,000 penalty without admitting or denying the SEC’s findings that he knowingly circumvented internal accounting controls and caused FCPA violations when he approved certain improper payments. The SEC’s investigation found no personal misconduct by General Cable’s former CEO Gregory B. Kenny and former CFO Brian J. Robinson, who returned $3.7 million and $2.1 million in compensation received from the company during the period when the accounting violations occurred. Therefore, it wasn’t necessary for the SEC to pursue a clawback action under Section 304(a) of the Sarbanes-Oxley Act. The SEC’s investigation, which is continuing, is being conducted by Rachel Nonaka, Mark Oh, Colin Rand, Eric Hubbs, David Johnson, and Olivia Choe. The case is being supervised by Anita Bandy, Kristen Dieter, and Bridget Fitzpatrick. The SEC appreciates the assistance of the U.S. Department of Justice, Federal Bureau of Investigation, and Portuguese Securities Market Commission.