Johnson Controls pays $14.4 million to end SEC bribery probe

Mon Jul 11, 2016 7:06pm EDT
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By Jonathan Stempel

(Reuters) - Johnson Controls Inc (JCI.N: Quote) agreed to pay $14.4 million to settle U.S. regulatory charges that its workers bribed Chinese shipbuilders and shipyards, including some owned by the Chinese government, to win business and enrich themselves.

The U.S. Securities and Exchange Commission on Monday said the accord resolves civil charges that the Milwaukee-based maker of car batteries and heating and ventilation equipment violated the federal Foreign Corrupt Practices Act.

Separately, the U.S. Department of Justice said it declined to bring related criminal charges, in part reflecting Johnson Controls' decision to voluntarily report the misconduct.

Johnson Controls is the third company to publicly settle with the Justice Department under that agency's pilot program to encourage companies to report bribery violations, in return for reduced penalties.

Last month, Akamai Technologies Inc (AKAM.O: Quote) and Nortek Inc NTK.O reached similar, unrelated settlements, also concerning alleged bribery in China.

Monday's developments remove a legal overhang for Johnson Controls as it prepares to merge with Dublin-based Tyco International Plc TYC.N, which it agreed to buy for $16.5 billion in a bid to lower its tax bill.

According to the SEC, from 2007 to 2013 roughly 19 workers at Johnson Controls' Chinese marine subsidiary used sham vendors to make roughly $4.9 million of improper payments, emboldened by what the regulator called a "culture of impunity."

The SEC said the company improperly recorded the payments on its books and lacked proper controls to detect them, and that the payments led to $11.8 million of profit on transactions.   Continued...

The logo of the U.S. Johnson Controls company is seen in Nersac, southwestern France, January 31, 2008. REUTERS/Regis Duvignau