SEC v. Montedison, S.p.A. (D.D.C. 1996)

• Case Name
• SEC v. Montedison, S.p.A. (D.D.C. 1996)

• Date Filed
• 03/28/2001

• Enforcement Agency
• SEC

• Countries
• Italy

• Foreign Official
• Italian politicians

• Date of Conduct
• 1988 to 1993

• Nature of Business
• Montedison S.p.A. is an Italian-based corporation engaged in agro industry, chemical, energy and engineering industries.  During the relevant time period, Montedison maintained a class of shares on the New York Stock Exchange and is registered with the SEC pursuant to Section 12(b) of the Exchange Act.

• Influence to be Obtained
• According to the SEC, from 1988 to 1993, Montedison engaged in a scheme to pay hundreds of millions of dollars in bribes Italian politicians and others.  Montedison made the alleged bribes to secure political backing to either change the terms of a contract or overturn the decision of a judge, and it failed to document the payments in the company’s records.  The fraudulent scheme was uncovered by an Italian investigation, and resulted in Montedison restating its financial statements to account for a loss of approximately $350 million. 
   
  As part of the scheme, deposited bearer bonds in an account in Switzerland from which the payments to third parties were then made.  To conceal the transactions, Montedison’s management created a false accounts receivable account.  Montedison then made fictitious loans to a string of wholly owned subsidiaries.  In 1992, Montedison determined that the loan was uncollectible and wrote it off.  
   

• Enforcement
• Montedison was charged with committing financial fraud by falsifying documents to inflate artificially the company’s financial statements.  The SEC’s complaint also charged Montedison with violating the corporate reporting, books and records, and internal control sections of the Securities Exchange Act of 1934.  Following cross motions for summary judgment by the parties in early 1998, final judgment was entered in favor of the SEC and against defendant Montedison in March 2001.
   
  On March 28, 2001, a settlement was entered into under which Montedison was ordered to pay a civil penalty of $3,000,000 for violating the internal controls and books-and-records provisions of the FCPA, as well as anti fraud and financial reporting federal securities laws.  Injunctive relief was not imposed.
   

• Amount of the Value
• Approximately $272 million.

• Amount of Business Related to Payment
• Not stated

• Intermediary
•  A Rome real estate developer.

• Citizenship of Parent Entity
• Italy

• Total Sanction
• $ 300,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 300,000

Montedison S.p.A. 

• Citation
• SEC v. Montedison, S.p.A., No. 1:96-cv-02631 (D.D.C. 2001).

• Date Filed
• 03/28/2001

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• Securities Fraud (Exchange Act Section 10(b)); False Statement to Regulators (Exchange Act Section 13(a)).

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• Italy