CORPORATE CRIME REPORTER
Monsanto Gets Deferred Prosecution For Bribery
19 Corporate Crime Reporter 2(1), January 10, 2005
The Justice Department charged Monsanto Company with violating the Foreign Corrupt Practices Act (FCPA) in connection with an illegal payment of $50,000 to a senior Indonesian Ministry of Environment official, and the false certification of the bribe as "consultant fees" in the company's books and records.
Federal officials charged Monsanto, the St. Louis, Missouri-based multinational giant, with violating the anti-bribery and false books and records provisions of the Foreign Corrupt Practices Act.
But the company did not have to plead guilty to the charge – instead it entered into the now ubiquitous deferred prosecution agreement.
"Companies cannot bribe their way into favorable treatment by foreign officials," said Assistant Attorney General Wray.
Except that the Justice Department said that it would dismiss the criminal information after three years if Monsanto fully complies with the terms of the deferred prosecution agreement, which requires the company to pay a $1 million penalty.
Under the deferred prosecution agreement, Monsanto agreed “to accept responsibility for the conduct of its employees in paying the bribe and making the false books and records entries, adopt internal compliance measures and cooperate with ongoing criminal and SEC civil investigations.”
An independent compliance expert will be chosen to audit the company's compliance program and monitor its implementation of and compliance with new internal policies and procedures.
Federal officials alleged that Monsanto hired an Indonesian consulting company to assist
it in obtaining various Indonesian governmental approvals and licenses necessary to sell its products in Indonesia.
At the time, the Indonesian government required an environmental impact study before authorizing the cultivation of genetically modified crops.
After a change in governments in Indonesia, Monsanto sought, unsuccessfully, to have the new government, in which the senior environment official had a post, amend or repeal the requirement for the environmental impact statement.
The Justice Department alleged that in 2002, a Monsanto employee, having failed to obtain the senior environment official's agreement to amend or repeal this requirement, authorized and directed the Indonesian consulting firm to make an illegal payment totaling $50,000 to the senior environment official to "incentivize" him to agree to do so.
The Monsanto employee also directed representatives of the Indonesian consulting company to submit false invoices to Monsanto for "consultant fees" to obtain reimbursement for the bribe, and agreed to pay the consulting company for taxes that company would owe by reporting income from the "consultant fees."
In February 2002, an employee of the Indonesian consulting company delivered $50,000 in cash to the senior environment official, explaining that Monsanto wanted to do something for him in exchange for repealing the environmental impact study requirement, the Justice Department alleged.
The senior environment official promised that he would do so at an appropriate time.
In March 2002, Monsanto, through its Indonesian subsidiary, paid the false invoices thus reimbursing the consulting company for the $50,000 bribe, as well as the tax it owed on that income. A false entry for these "consulting services" was included in Monsanto's books and records.
The senior environment official never authorized the repeal of the environmental impact study requirement.
Monsanto has also settled related civil enforcement proceedings by the Securities and Exchange Commission by agreeing to pay a $500,000 civil penalty.
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