Deere Ordered to Pay $9.9M in Wirtgen Thailand Bribery Scheme

John Deere has agreed to pay $9.9 million to resolve allegations that its subsidiary Wirtgen Thailand bribed government officials and private companies with cash payments, massage parlor visits, luxury European sightseeing trips and other gifts to win business, according to a September 10 release from the U.S. Securities and Exchange Commission.

Deere cooperated with the SEC but neither admitted nor denied the SEC’s findings.

Deere acquired Wirtgen Group in December 2017, expanding its product line into roadbuilding equipment. The SEC’s investigation found that from at least late 2017 through 2020, Wirtgen Thailand employees bribed Thai government officials with the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads to win multiple government contracts. The order also found that Wirtgen Thailand employees bribed employees of a private company to win sales to that company.

According to the case summary, bribes took the form of meals, fake consulting fees, entertaining government officials at massage parlors, hosting officials on elaborate sightseeing expeditions disguised as “factory visit” trips, and cash payments. Wirtgen’s managing director for Southeast Asia or its managing director in Thailand routinely approved these expense reports without regard for compliance with Deere’s policies and procedures relating to the entertainment of government officials and the true purpose of the payments.

The scheme resulted in $4.3 million in profits for Wirtgen Thailand, and the SEC says the improper payments were covered up as legitimate expenses in Deere’s books and records. This conduct violates the Foreign Corrupt Practices Act, a federal anti-bribery law.

“After acquiring Wirtgen Thailand in 2017, Deere failed to timely integrate it into its existing compliance and controls environment, resulting in these bribery schemes going unchecked for several years,” said Charles E. Cain, chief of the SEC Enforcement Division’s FCPA Unit. “This action is a reminder for corporations to promptly ensure newly acquired subsidiaries have all the necessary internal accounting control processes in place.”

Deere agreed to the SEC’s order requiring it to pay disgorgement and prejudgment interest totaling approximately $5.4 million and a civil penalty of $4.5 million.

In an official statement, Deere officials said, “These allegations represent a clear violation of our company policies and ethical standards. Furthermore, they are in direct conflict with our core values — particularly our commitment to integrity — and we strongly condemn such practices. The individuals involved in this matter are no longer with the company.”

Michelle Ramos, Denise Hansberry, Sonali Singh and Tracy L. Price of the SEC’s FCPA Unit conducted the investigation.