Freight-shipping company Con-way Inc. agreed to pay $300,000 to settle Securities and Exchange Commission charges that improper payments made by a unit to numerous government officials violated the Foreign Corrupt Practices Act.
Emery Transnational, a Philippines-based firm controlled by the San Francisco-based Con-way, made $417,000 in improper payments to the officials in various countries between 2000 and 2003, according to the SEC complaint. It said that $244,000 — allegedly paid to induce the officials to violate customs regulations, settle customs disputes, and reduce or not enforce fines for administrative violations payments of about — went to officials at the Philippines Bureau of Customs and the Philippine Economic Zone Area.
Con-way did not admit to or deny the allegations in agreement to settle.
In addition, the SEC alleged that Emery made $173,000 in improper payments to foreign officials at 14 state-owned airlines that conducted business in the Philippines. The complaint charged that the payments attempted to induce airline officials to improperly reserve space for Emery Transnational on planes, to falsely under-weigh shipments, and to cut shipping charges by improperly consolidating multiple shipments into a single load.
According to the SEC, none of the improper payments made by Emery was accurately reflected in Con-way’s books and records, and Con-way knowingly failed to implement a system of internal accounting controls concerning Emery that would both ensure that Emery Transnational complied with the FCPA and require that the payments it made to foreign officials were accurately reflected on its books and records.
In a related administrative proceeding, the commission issued a settled cease-and-desist order against Con-way finding that Con-way violated the books and records and internal controls provisions of the Exchange Act in connection with the improper payments made by Emery. Without admitting or denying the Commission’s findings, Con-way consented to the issuance of an order that requires Con-way to cease and desist from committing or causing any violations and any future violations of the Exchange Act.
Con-way, which changed its name from CNF Inc. in 2006, is an international freight transportation and logistics services company that conducts operations in a number of foreign jurisdictions. During the period that Con-way was cited by the SEC, Menlo Worldwide Forwarding Inc. was its wholly-owned U.S.-based unit, having been purchased in 1989. Called Emery Air Freight Corp., the company was headquartered in Redwood City, Calif. Menlo had a 55-percent voting interest in Emery. Con-way sold Menlo Forwarding to United Parcel Service of America Inc. in December 2004.
“During the relevant period, Con-way and Menlo Forwarding engaged in little supervision or oversight over Emery Transnational,” the SEC asserted in its complaint. “Neither Con-way nor Menlo Forwarding took steps to devise or maintain internal accounting controls concerning Emery Transnational, to ensure that it acted in accordance with Con-way’s FCPA policies, or to make certain that its books and records were detailed or accurate.”