Panasonic Corp. subsidiary Panasonic Avionics Corp. (PAC) will pay $137.4 million in criminal penalties to the U.S. government to settle charges it used consultants improperly and concealed payments to third parties, both in violation of the Foreign Corrupt Practices Act.
That, in turn, caused parent and electronics giant Panasonic to falsify its books, said the Justice Department, which announced the settlement.
PAC supplies in-flight entertainment systems and airplane communications. Justice said that among its transgressions was paying a consultant $875,000 over a six-year period while the consultant was employed by a state-owned airline negotiating a lucrative contract; Panasonic earned $92 million in profit from the contract.
“The Criminal Division will take all appropriate action to ensure that the investing public is able to trust the accuracy of the financial statements of companies that avail themselves of American securities exchanges," the DOJ said.
PAC conceded it had "mischaracterized" the money as "consultant payments," which parent Panasonic then incorrectly designated as "selling and general administrative expenses."
PAC also hid $7 million in payments to unqualified sales agents, first terminating the relationships, then using them after they were re-hired by a subcontractor, DOJ said.
PAC was charged with one count of knowingly and willfully causing the falsification of the books, records and accounts of parent company Panasonic, but that was deferred with Panasonic's agreement to pay $137,403,812.
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