Global freight forwarder Panalpina Inc. has announced the final resolution of claims against it arising from an investigation by the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) for violations of the U.S. Foreign Corrupt Practices Act (FCPA). Under the terms of the agreements Panalpina will pay a total of approximately $81.9 million in fines and disgorgement of profits.
Panalpina World Transport (Holding) Ltd (PWT) has entered into a Deferred Prosecution Agreement (DPA) with the DOJ. Under the DPA, the DOJ has agreed to defer any criminal prosecution of PWT for three years. PWT has accepted certain obligations under the DPA, such as continuing to improve its compliance policies and procedures and providing regular reports to the DOJ on the company’s progress. If PWT satisfies its obligations under the DPA, the DOJ has agreed to release the company from criminal liability at the end of the three-year term.
As part of PWT's settlement of the case, its subsidiary, Panalpina, has agreed to enter a guilty plea to charges related to the violation of the accounting provisions of the FCPA, and to pay a fine of $70.6 million in four installments. Panalpina will also consent to a final judgment in a civil action brought by the SEC alleging violations of the FCPA’s anti-bribery and accounting requirements and will disgorge USD 11.3 million in profits. All of these agreements are subject to court approval.
“The settlement of these claims marks the closing of an extremely burdensome chapter in Panalpina’s history and the end of a very demanding three-year effort to address and eliminate serious concerns,” says Monika Ribar, Panalpina’s CEO. “Now it is time for us to look to the future and to build on the strong and sustainable compliance culture we have put in place.” The company hopes to renew relationships with customers who have ceased or reduced business activities with Panalpina due to the investigation.
The DOJ noted PWT's “exemplary” cooperation, and PWT's remediation has resulted in a change in its management culture and business model, particularly in high risk countries. PWT's cooperation with the U.S. government's investigation, its own internal investigation, its remediation efforts and its commitment to building a strong compliance program resulted in significant benefits for PWT in the resolution of the case. These benefits included a reduction in fines.
PWT has appointed an outside compliance consultant to ensure that it meets its compliance and reporting obligations under its DPA. PWT's Legal and Compliance Committee will oversee the compliance undertakings to which PWT has agreed in the DPA.
Panalpina's internal investigation included comprehensive investigations in nine countries and a focused review of transactions and operations in an additional 36 countries. In addition, Panalpina's compliance department undertook comprehensive and systematic risk assessments in 33 countries, most of which are high-risk emerging markets. These assessments included a review of third-party relationships, the result of which has been that PWT has terminated relationships with third parties which did not meet the company's high compliance standards. PWT also closed operations in three countries, including Nigeria, where compliance risks were too pervasive.
Panalpina has established a compliance structure and programs aimed at ensuring rigorous adherence to the FCPA and other anti-bribery laws.