Universal to pay nearly $9 million to settle bribery probe
- August 6, 2010
Richmond-based Universal Corp., a global tobacco merchant and processor, has agreed to pay nearly $9 million to the U.S. Justice Department and Securities and Exchange Commission to settle a bribery investigation. Its Brazilian subsidiary has pleaded guilty to violating bribery and conspiracy provisions of the federal Foreign Corrupt Practices Act.
Meanwhile, two foreign subsidiaries of a tobacco leaf rival, Morrisville, N.C.-based Alliance One International Inc., have pled guilty to similar charges and agreed to pay fines totaling $9.45 million in a related case.
Universal Corp. said it voluntarily told federal officials of suspicious payments discovered by the company’s audit committee and cooperated with the investigation. The Justice Department will not prosecute the company if it meets obligations outlined in the settlement over the next three years.
“These past payments were — and are— contrary to the policies and standards of Universal and its subsidiaries, “ George C. Freeman III, Universal’s chairman, president, and CEO said in a statement. “We have absolutely no tolerance for this type of activity.”
According to court documents, the companies’ foreign subsidiaries paid kickbacks to Thailand Tobacco Monopoly officials from 2000 to 2004 in selling Brazilian tobacco. The Justice Department said subsidiaries of Dimon Inc. and Standard Commercial Corp., which merged in 2005 to form Alliance One, paid bribes totaling $1.23 million while Universal’s Brazilian subsidiary paid $697,000 in kickbacks. The Justice Department said the subsidiaries disguised the payments as sales agent commissions on their books.
In addition, a subsidiary now owned by Alliance paid bribes in Kyrgyzstan, according to court documents,
As a result of the settlement, Universal’s Brazilian subsidiary pled guilty to violating the Foreign Corrupt Practices Act and will pay a $4.4 million fine. In addition, the company will disgorge $4.58 million in profits and interest. The company said it has had accrued money to cover the cost of the settlement and will not have to take charges on its 2011 earnings.
In federal court in Danville, Alliance One subsidiaries Alliance One International AG and Alliance One Tobacco Osh LLC pled guilty to violating Foreign Corrupt Practices Act and will be sentenced in October.