SEC accuses ADM and three ex-executives of accounting fraud

The Securities and Exchange Commission recently announced that Archer-Daniels-Midland Company (ADM) and some of its former executives have agreed to settle charges brought against them. The SEC alleged that ADM and the executives involved in the case violated anti-bribery and internal accounting controls provisions of the Securities Exchange Act.

The charges against ADM and its former executives stem from alleged misconduct involving fuel ethanol plant construction in China. The SEC claimed that ADM’s subsidiary in Germany indirectly paid €110,000 over a six-month period to bribe government officials within a Chinese state-owned enterprise. According to the SEC, this misconduct violated the Foreign Corrupt Practices Act (FCPA).

In addition to the bribery allegations, the SEC also accused ADM of failing to maintain accurate books and records related to their subsidiaries. The misconduct occurred between 2008 and 2014, and included invoices that were falsified to conceal the true nature of the payments made by ADM’s subsidiary in Germany. The SEC alleged that ADM reported false information in their consolidated financial statements during this time period.

As part of the settlement, ADM agreed to pay a civil penalty of $17 million to resolve the SEC’s charges. In addition, the company has committed to making improvements to its internal accounting controls to prevent future violations of the FCPA. ADM stated that they cooperated fully with the SEC’s investigation and have taken steps to rectify the misconduct that occurred.

ADM’s former executives involved in the case, including Vince F. Hock and Michael D. Miller, also agreed to settle charges with the SEC. Hock and Miller consented to pay civil penalties of $45,000 and $55,000, respectively. Both individuals neither admitted nor denied the SEC’s allegations but agreed to cease and desist from future violations of the anti-bribery and internal accounting controls provisions of the Securities Exchange Act.

Overall, the settlement between the SEC, ADM, and the former executives underscores the importance of maintaining accurate books and records and adhering to anti-bribery regulations. The case serves as a reminder to companies operating internationally to ensure compliance with the FCPA and other anti-corruption laws. By implementing robust internal controls and promoting a culture of ethical conduct, companies can avoid costly penalties and reputational damage associated with violations of anti-bribery regulations.