Transport Minister Suriya Jungrungreangkit has launched an inquiry after Deere admitted to bribery and corruption in Thailand, involving cash, lavish trips, and massages for officials. It led to a $10 million SEC settlement between US authorities and the iconic American firm.
US agricultural and construction giant Deere has pleaded guilty to bribery and corruption in Thailand through a recently acquired subsidiary. The revelations come as part of a settlement between the firm and the Securities and Exchange Commission (SEC). The activities admitted to in the United States suggest that Thai government and Royal Air Force officials were given cash in envelopes, taken on European junkets, and treated to group visits to massage parlours. In short, the company admitted to making a profit of $4.3 million in the affair from 2017 to 2020. On Friday, Minister of Transport Suriya Jungrungreangkit ordered a panel to report on the matter within 15 days.
Transport Minister Suriya has launched an investigation into bribery allegations involving the Thai unit of the multinational construction equipment firm Deere & Company. A special panel, led by the Transport Ministry’s permanent secretary, Chayatan Phromsorn, has been tasked with delivering a report on the matter within 15 days.
The investigation follows a $10-million settlement announced in the United States between Deere and US authorities. The settlement concluded an investigation by the US Securities and Exchange Commission (SEC) into bribery schemes conducted by Wirtgen Thailand, a subsidiary of Deere, from 2017 to 2020.
Wirtgen Thailand accused of paying bribes to secure government contracts from 2017 to 2020
The bribes were allegedly paid to officials at Thailand’s Department of Highways, Department of Rural Roads, and Royal Thai Air Force, in exchange for confidential information and lucrative government contracts. The SEC investigation revealed that Wirtgen Thailand, a wholly owned subsidiary of Deere, paid bribes in various forms. These included cash payments, meals, massage parlour services, consulting agreements, and lavish overseas trips. The SEC report alleges that these bribes helped Wirtgen Thailand secure several government contracts in Thailand, resulting in approximately $4.3 million in profits for the company.
Minister Suriya emphasised that the Transport Ministry’s fact-finding committee is mandated to collect all relevant facts. Indeed, it may summon individuals for questioning and investigate any possible connections between Wirtgen Thailand and officials from the two government departments involved.
Transport Ministry investigation will extend to state enterprises under the ministry’s control
Additionally, the probe will extend to other state enterprises under the Transport Ministry. The panel’s primary objective is to ensure fairness, protect the interests of the government, and maintain the ministry’s image. The committee must submit its findings within the next two weeks. Meanwhile, Suriya has pledged that all parties involved will be treated fairly during the investigation.
The allegations came to light when Deere & Company agreed to settle charges with the SEC for approximately $10 million without admitting or denying the findings. The SEC’s investigation found that Wirtgen Thailand had violated the Foreign Corrupt Practices Act (FCPA) by engaging in a systematic bribery scheme. Deere had acquired Wirtgen in 2017, and the bribery activities reportedly began shortly after the acquisition.
Bribery scheme involved cash payments and luxury trips to Europe disguised as business expenses
The SEC’s findings detailed how Wirtgen employees disguised improper payments as legitimate business expenses, allowing the bribery scheme to continue unchecked for several years. These expenses were recorded in Deere’s books, and the company failed to integrate Wirtgen into its compliance and control systems in a timely manner. The SEC report described various methods used by Wirtgen Thailand to influence Thai officials. In some cases, employees offered cash payments directly, while in other instances, bribes were disguised as luxury trips abroad.
One trip in 2019 took several Thai officials to Switzerland and Germany, with Wirtgen spending nearly $50,000 on accommodations and shopping. Despite the official purpose of the trip being to visit a factory, no such visit took place. Shortly after the trip, Wirtgen Thailand secured two government contracts worth approximately $2 million.
Wirtgen Thailand also used group massage parlour visits and direct cash bribes in envelopes to officials
In addition to lavish trips, Wirtgen also entertained government officials at massage parlours in Thailand. On one occasion, 15 officials from a government agency were treated to a massage parlour visit, which was later expensed by Wirtgen employees. In another instance, a Wirtgen manager sent a text to a colleague mentioning “candy money” for officials, referring to a bribe payment. The manager instructed the colleague to prepare envelopes with cash.
In brief, the scheme ran up to 2020 and generated $4.3 million in profits for the US firm. Some of the contracts included servicing and parts and are still active.
In Thailand, the National Anti-Corruption Commission (NACC) has also announced plans to investigate the claims. Presently, it is studying the bribery allegations documented in the US case. The NACC will coordinate with the Transport Ministry’s fact-finding committee to review actions of Thai officials involved in the case.
Deere & Company condemns bribery actions, promises adherence to ethical standards going forward
John Deere, the parent company of Wirtgen, has condemned the bribery activities and expressed regret over the incident. In a statement, Deere representatives said that the bribery scheme was a violation of the company’s ethical standards and core values. The company added that it had conducted a thorough internal investigation and fully cooperated with the SEC’s inquiry. According to the statement, individuals involved in the bribery scheme are no longer employed by the company.
The bribery scandal has raised questions about how multinational companies integrate newly acquired subsidiaries into their compliance frameworks. The SEC noted that Deere had failed to implement adequate compliance controls for Wirtgen, allowing the bribery scheme to persist for several years without detection.
Foreign Corrupt Practices Act helped expose the bribery, leading to fines and further investigations
At length, this scandal has come to light due to strict compliance laws in corporate America. Deere has conceded to a US Securities and Exchange Commission (SEC) investigation. In turn, it has paid a civil fine of $4.5 million in addition to fees of $5.4 million.
The Foreign Corrupt Practices Act was introduced by former US President Jimmy Carter in 1977. In short, it prohibits both US firms and individuals from suborning foreign governments or entities through bribery. The measure has been extraordinarily effective.
In September, Charles E. Cain of the Securities and Exchange Commission (SEC) summarised this case. “Deere failed to timely integrate (Wirtgen) into its existing compliance and controls environment. This resulted in these bribery schemes going unchecked for several years,” he explained.
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Microsoft accepts charges of corrupt payments in Thailand as it makes a deal with US investigators
Indeed, this is not the first time a leading US firm has been exposed to underhanded practices in Thailand. In 2019, Microsoft admitted to making corrupt payments linked to its operations in Thailand. Certainly, that admission also came following a US Securities and Exchange Commission (SEC) probe.
Previously, UK officials also implicated Rolls-Royce in a bribery and corruption scandal linked with the operations of Thai Airways.
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