Goodyear Tire & Rubber Co. has agreed to pay more than $16 million to settle charges made by the Securities and Exchange Commission that it violated the Foreign Corrupt Practices Act when its subsidiaries “paid bribes to land tire sales in Kenya and Angola.”
The SEC said that Goodyear “failed to prevent or detect more than $3.2 million in bribes during a four-year period.” Bribes were allegedly paid in cash by Goodyear’s subsidiaries, Treadsetters in Kenya and Trentyre in Angola, to private companies or government-owned entities, as well as other local authorities such as police or city council officials, according to the filing.
The improper payments were falsely recorded as legitimate business expenses in the books and records of the subsidiaries, which were consolidated into Goodyear’s books and records, said the SEC.
Goodyear neither admitted nor denied the SEC’s findings.
“Goodyear’s lax compliance controls enabled a routine of corrupt payments by African subsidiaries that were hidden in their books,” said Scott W. Friestad, associate director of the SEC’s enforcement division.
In settling the charges, Goodyear has agreed to pay a fine of $14.1 million – the amount of illicit profits in Kenya and Angola – plus a $2.1 million prejudgment interest. Goodyear also agreed to report its FCPA remediation efforts to the SEC for a three-year period.
Goodyear’s settlement with the SEC fully resolves all outstanding issues related to these investigations.
Goodyear told Tire Review that in 2011, it received an allegation through its confidential ethics hotline, regarding improper payments in Kenya, and from an employee about improper payments in Angola. Goodyear immediately launched an investigation.
“The company voluntarily disclosed the results of its investigation to the Department of Justice and SEC and cooperated with those agencies in the review of the allegations,” said a spokesperson from Goodyear. “As a result of its review, the company has implemented, and is continuing to implement, appropriate remedial measures. Goodyear divested its ownership interest in the Kenyan business in 2013 and the company is in the process of selling the Angolan business.”
The spokesperson also told Tire Review that Goodyear has a “comprehensive anti-corruption compliance program and continues to improve and enhance its ability to monitor, detect, investigate and address potential issues. Goodyear encourages its associates and others to speak up and to contact its confidential ethics hotline when they are aware of or suspect inappropriate behavior.”