By Jonathan Stempel
(Reuters) – Johnson Controls Inc
The U.S. Securities and Exchange Commission on Monday said the accord resolves civil charges that the Milwaukee-based maker of car batteries and heating and ventilation equipment violated the federal Foreign Corrupt Practices Act.
Separately, the U.S. Department of Justice said it declined to bring related criminal charges, in part reflecting Johnson Controls’ decision to voluntarily report the misconduct.
Johnson Controls is the third company to publicly settle with the Justice Department under that agency’s pilot program to encourage companies to report bribery violations, in return for reduced penalties.
Last month, Akamai Technologies Inc
Monday’s developments remove a legal overhang for Johnson Controls as it prepares to merge with Dublin-based Tyco International Plc
According to the SEC, from 2007 to 2013 roughly 19 workers at Johnson Controls’ Chinese marine subsidiary used sham vendors to make roughly $4.9 million of improper payments, emboldened by what the regulator called a “culture of impunity.”
The SEC said the company improperly recorded the payments on its books and lacked proper controls to detect them, and that the payments led to $11.8 million of profit on transactions.
Without admitting wrongdoing, Johnson Controls agreed to pay a $1.18 million civil fine, give up $11.8 million of gains, and pay $1.38 million of interest to settle.
No individuals were charged, but the Justice Department said Johnson Controls has ended the employment of the workers involved in the misconduct.
In a statement, Johnson Controls confirmed the settlements.
Shareholders of Johnson Controls and Tyco are expected to vote on the companies’ merger on Aug. 17, and a closing is possible around Oct. 1, the companies have said.
(Reporting by Jonathan Stempel in New York; Editing by Tom Brown and Andrew Hay)