Diebold Inc., a manufacturer of ATMs, bank security systems and voting machines, has agreed to pay a $48-million penalty to settle charges it bribed officials at government-owned banks in China, Russia and Indonesia in order to win their business.
The North Canton, Ohio, company was accused by the Securities and Exchange Commission and the Justice Department of spending about $1.8 million to send the foreign bank officials on vacations to the United States and Europe and provide entertainment and gifts in violation of a federal law that prohibits U.S. companies from bribing foreign government officials.
The company was also accused of giving annual cash gifts ranging from $100 to more than $600 to foreign bank executives.
Diebold falsely recorded the bribes in its books as training expenses, the SEC alleged.
“A bribe is a bribe, whether it’s a stack of cash or an all-expense-paid trip to Europe,” said Scott W. Friestad, an associate director in the SEC’s enforcement division. “Public companies must be held accountable when they break the law to influence government officials with improper payments or gifts.”
According to the SEC complaint filed in federal court in Washington, Diebold’s misconduct occurred from 2005 to 2010.
Among the destinations of the U.S. trips were the Grand Canyon, Napa Valley, Disneyland, and Universal Studios as well as Las Vegas, New York, Chicago, Washington and Hawaii, the agency said.
Officials also were treated to European vacations, the SEC charged. For example, it said, eight officials at a government-owned bank in China enjoyed a two-week trip at Diebold’s expense that included stays in Paris, Brussels, Amsterdam, Cologne, Frankfurt, Munich, Salzburg, Vienna, Klagenfurt, Venice, Florence and Rome.
The Russian bribes were funneled through a distributor using phony service contracts to hide and falsely record the payments as legitimate business expenses, according to the SEC.
In addition to the fine, Diebold agreed to appoint an independent compliance monitor to prevent future violations of the Foreign Corrupt Practices Act.
Diebold shares were up 25 cents, or 1%, to $29.97 in morning trading Tuesday.
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