- The Washington Times - Monday, April 30, 2018

A Panasonic Corp. subsidiary will pay about $280 million to settle civil and criminal charges that the company falsified financial records to conceal payments to sales representatives working in China and other Asian countries, the Department of Justice said Monday

The charges were filed against Panasonic Avionics Corp. (PAC) of Lake Forest, California, a subsidiary that designs in-flight entertainment systems and communications services for airlines.

According to court filings, the company retained sales consultants in for “improper purposes” in a bid to win business state-run Middle Eastern and domestic airlines.

The consultants did little or no actual consulting work and paid through a third-party service provider out of funds the company president allegedly controlled with little or oversight by anyone at Panasonic or PAC, the Justice Department said. The scheme occurred from January 2007 through 2013 and involved senior company executives.

In one instance, an individual was offered a consulting position at the same time he was employed by a state-run airline, court documents revealed. That individual was paid $875,000 over a six-year period even though that person did “little work” for the company, according to court filings.



Payments to that individual were mischaracterized as legitimate consulting services, which caused Panasonic to incorrectly designate those payments on its books, records and accounts, according to court documents.

The company is also accused of using sales representatives in Asia who did not pass due diligence requirements. Prosecutors said the company secretly continued to use the agents by rehiring them as contractors for another company, which has passed due diligence checks. Through this process, PAC hid more than $7 million in payments to at least 13 sales agents, according to court records.

“When Panasonic Avionics Corporation caused its publicly traded parent company to falsify its books and records, it distorted the information available to legitimate investors,” said Acting Assistant Attorney General John P. Cronan. “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.”

Of the $280 million that will be paid by Panasonic and its subsidiary, roughly $143 million will be used to settle related civil charges brought by the U.S. Securities and Exchange Commission, the Justice Department said.

Panasonic also agreed to improve its compliance program and will cooperate in any ongoing investigations, according to court filings.

 

Panasonic said in a statement that it will take several steps to improve its compliance program, including installing a new executive management team at PAC. It has also hired a team of compliance, finance and audit experts, and reduced its use of third-party agents and consultants, according to the statement.
“We are pleased to have resolved these investigations; we have taken extensive steps over the past few years to strengthen Panasonic Aviation’s compliance programs and internal controls, and we welcome an independent compliance monitor to assess our progress,” said Hideo Nakano, CEO of Panasonic

 

 

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