July 15, 2024

Common Sense: Bribery, but Nobody Was Charged

The women happened to be the wives of two veterinarians stationed at the plants as part of Mexico’s effort to meet high sanitary and processing standards. The veterinarians certified products as suitable for export, a step required by countries like Japan and increasingly sought after by Mexican consumers as an assurance of quality and safety for locally produced processed meats.

A few days later, senior Tyson executives convened a meeting at headquarters. Someone pointed out the obvious. The purpose of the payments was “to keep the veterinarians from making problems,” according to a subsequent memo — in short, bribes. Participants at this meeting — who included the president of Tyson International, the vice president for operations, and the vice president for internal audit — evidently agreed the payments to the wives had to stop. A company lawyer said he was seeking advice on “possible exposure” from the payments, evidently referring to potential liability for maintaining fraudulent records and bribing foreign officials, which are felonies under the Foreign Corrupt Practices Act.

And then, having identified the serious ethical and legal lapses, and the need to stop the bogus payments, this group of executives “were tasked with investigating how to shift the payroll payments to the veterinarians’ wives directly to the veterinarians,” according to a subsequent statement of facts negotiated by Tyson’s lawyers and the Department of Justice.

Written in the passive voice typical of such documents, the statement raises the question of who “tasked” such an undertaking.

A subsequent memo written by Tyson’s audit department concluded that the “doctors will submit one invoice which will include the special payments formally [sic] being made to their spouses along with there [sic] normal consulting services fee.” The invoices would be identified as “professional honoraria.”

What were these Tyson officials thinking? It’s hard to see how simply shifting the payments did anything to mitigate the bribery scheme or the false descriptions of the payments. If anything, it seems even more brazen. There’s no indication anyone gave serious consideration to stopping the payments — only to finding a new way to make them. The president of Tyson International, the highest-ranking official at the meeting, communicated this “resolution” to Tyson’s chief administrative officer by e-mail on July 14, further pushing the issue up the chain of command.

The payments continued. When another Mexican plant manager complained to an accountant at headquarters that he was “uncomfortable” with this, the accountant spoke to the president of international — who again tried to squelch the issue. “He agreed that we are O.K. to continue to make these payments against invoices (not through payroll)” until we are able to get [the Mexican inspection program] to change, the accountant informed the plant manager.

The issue of the payments resurfaced in November 2006, and this time, Tyson did what it should have done two years earlier: it retained an outside law firm, Kirkland Ellis, conducted an internal investigation and, under a government program intended to encourage voluntary disclosure of white-collar crime, turned the results over to the Justice Department and the Securities and Exchange Commission. The government’s investigation ended this February, when Tyson was charged with conspiracy and violating the Foreign Corrupt Practices Act. Tyson agreed to resolve the charges with a deferred prosecution agreement in which it “admits, accepts and acknowledges” the government’s statement of facts, and paid a $4 million criminal penalty. The company paid an additional $1.2 million and settled related S.E.C. charges that it maintained false books and records and lacked the controls to prevent payments to phantom employees and government officials.

But what about those at Tyson responsible for the bribery scheme?

Corporations may have assets and liabilities, but they don’t commit crimes — their officers, executives and employees do. And the 23-page letter agreement between Tyson and the Department of Justice, the criminal information, and the S.E.C.’s public statement of facts all withheld names, identifying the participants only as “senior executive,” “VP International,” “VP Audit” and so on.

This is James B. Stewart’s first Common Sense column for Business Day, where it will appear on Saturdays. Trained as a lawyer, Mr. Stewart is the author of “Den of Thieves,” “Disneywar” and “Tangled Webs: How False Statements Are Undermining America.” He shared a Pulitzer Prize for explanatory reporting in 1988.

Article source: http://feeds.nytimes.com/click.phdo?i=1599d7053e8a3877d2f6821db2e90af1

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