Panasonic Avionics and parent settle bribery charges for 1m

Panasonic Avionics and its corporate parent have agreed to pay $ 281 million to settle federal allegations that it bribed airline officials and airline consultants in an effort to land lucrative inflight entertainment contracts.

Federal authorities do not name the airlines involved, but say one carrier is based in the USA and one is based in the Middle East.

The payments include $ 137 million to settle criminal charges brought against Panasonic Avionics by the US Department of Justice (DOJ), and $ 147 million to settle allegations levied at parent company Panasonic Corp by the US Securities and Exchange Commission (SEC).

Both government offices allege that Panasonic or Panasonic Avionics violated the US Foreign Corrupt Practices Act.

“Panasonic’s US subsidiary, Panasonic Avionics Corp, a provider of in-flight entertainment and communication systems, offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help [Panasonic Avionics] in obtaining and retaining business from the airline,” says the SEC in a 30 April media release.

Panasonic Avionics confirms it agreed to pay $ 280.6 million to settle the allegations.

“We are pleased to have resolved these investigations. We have taken extensive steps over the past few years to strengthen Panasonic Avionics’ compliance programs and internal controls, and we welcome an independent compliance monitor to assess our progress,” says Panasonic Avionics chief executive Hideo Nakano in a release.

The release adds that the company hired a new management team. Nakano, formerly deputy chief executive, succeeded Paul Margis in February 2017. The company also appointed a new chief operating and chief financial officer at that time, promoting executives from within Panasonic.

The DOJ and SEC allege Panasonic made bribes through payments to phony consultants in a scheme that stretched from 2007 to 2016. Panasonic hired the consultants through “third-party service providers”.

One such consultant was a “foreign official… employed as a contracting manager” at a Middle East airline, says the DOJ’s lawsuit against Panasonic Avionics, filed 30 April in the US District Court for the District of Columbia.

Though that consultant “did little work” for Panasonic Avionics, the company paid that person $ 875,000. Panasonic Avionics made $ 92 million in profits from deals in which that person was involved, the DOJ says.

Panasonic also paid $ 825,000 to a consultant who, at the same time, was “a consultant for domestic airline”, says the suit.

The company used that person “to obtain confidential non-public business information about the airline, including information about its negotiations” with competitors, says the suit.