Tyson Foods charged with violations of the Foreign Corrupt Practices Act

 

The Securities and Exchange Commission (SEC) today charged Tyson Foods Inc. with violating the Foreign Corrupt Practices Act (FCPA) by making illicit payments to two Mexican government veterinarians responsible for certifying its Mexican subsidiary’s chicken products for export sales.

The SEC alleged that Tyson de Mexico concealed the improper payments by putting two veterinarians’ wives on its payroll but they performed no work for the company. The spouses were later removed from the payroll and their payments were processed with invoices issued for “services.” Tyson de Mexico paid the veterinarians, who were responsible for certifying Tyson’s chicken products for export and served as official Mexican government veterinarians at Tyson facilities, a total of $100,311. It was not until two years after Tyson Foods officials first learned about the subsidiary’s illicit payments that its counsel instructed Tyson de Mexico to cease making the payments.

The SEC further charged that in connection with these improper payments, Tyson Foods failed to keep accurate books and records and failed to implement a system of effective internal controls to prevent salary payments to phantom employees and the payment of illicit invoices. The improper payments were recorded as legitimate expenses in Tyson de Mexico’s books and records, and included in Tyson de Mexico’s reported financial results for fiscal years 2004, 2005 and 2006. Tyson de Mexico’s financial results were, in turn, a component of Tyson Foods’ consolidated financial statements filed with the SEC for those years.

Without admitting or denying the SEC’s allegations, Tyson Foods consented to the entry of a final judgment ordering disgorgement plus pre-judgment interest of more than $1.2 million and permanently enjoining it from violating the anti-bribery, books and records, and internal controls provisions of the FCPA. The proposed settlement is subject to court approval.

In a related criminal action announced today, the Department of Justice (DOJ) charged Tyson Foods with conspiring to violate the FCPA and violating the FCPA. The DOJ and Tyson Foods agreed to resolve the charges by entering into a deferred prosecution agreement. Tyson Foods also agreed to pay a $4 million criminal penalty.

Fraudulent credentials rampant in China

Media sources report that scholars in China say that fraud in education and scientific research, and faking credentials to get work or advance in careers is staggering. With frequent news of falsified resumes by prominent officials and company heads, employers in the country have adopted stricter background checks of job candidates.

According to news reports, Fang Zhouzi, known for exposing plagiarism and academic fraud in China, said that Tang Jun, who was president of Microsoft’s China operations from 2002 to 2004, had falsely claimed in his autobiography that he earned a doctorate degree from the California Institute of Technology, when in fact, the degree was bought from California-based Pacific Western University, known as a “diploma mill.” The scandal was later dubbed the “fake credentials gate” by Chinese media.

Several media publications also brought up the case of Zhang Wuben, who through television shows, DVDs and a best-selling book, convinced millions of people that raw eggplant and immense quantities of mung beans could cure lupus, diabetes, depression and cancer. Zhung’s patient consultations, for which he charged $450 for ten minutes, were booked solid through 2012. But when Chinese journalists dug deeper into Zhung’s background, they learned that contrary to his claims, Zhung was not from a long line of doctors (his father was a weaver) nor did he earn a degree from Beijing Medical University. His only formal education was a correspondence course that he took after losing his job at a textile mill.

The exposure of Zhang’s fake credentials gained media focus and started a new round of scrutiny into the dishonest practices that plague Chinese society, and the Chinese government has vowed to address the problem. To facilitate employers’ checks of their job candidates, the China’s Ministry of Education released a list of approved Chinese-foreign jointly-run schools and a list of overseas colleges. And employers now have a greater awareness of the value of background investigations. Zhu Shibo, manager of recruitment at the China International Intellectech Corporation, one of the country’s leading human resources service providers, told media sources that the company has received unprecedented commissions to investigate job applicants. A typical background investigation includes highest education verification, employment experience confirmation and criminal record searches.

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