In the Matter of Johnson Controls, Inc. (2016)

• Case Name
• In the Matter of Johnson Controls, Inc. (2016)

• Date Filed
• 07/11/2016

• Enforcement Agency
• SEC

• Countries
• China

• Foreign Official
• nnamed Chinese foreign officials.

• Date of Conduct
• 2007 to 2016

• Nature of Business
• Johnson Controls, based in Milwaukee, Wisconsin, is a global provider of automatic temperature control systems for buildings, industrial facilities, and ships.  It operates in 150 countries around the world with approximately 15,000 employees and maintains a class of securities on the New York Stock Exchange.

• Influence to be Obtained
• According to the SEC, beginning in 2007, a pair of Johnson Controls’ wholly owned Chinese subsidiaries (jointly “China Marine”) engaged in a scheme to inflate vendor sales contracts to facilitate payments for foreign officials. China Marine employees allegedly conspired with local vendors to prepare inflated vendor invoices for which the company would approve payment.  The difference between the actual vendor sale price and the inflated sale price was then allegedly used to enrich China Marine employees and bribe officials from Chinese government-owned shipyards and ship-owners, as well as other unknown individuals.  In total, China Marine allegedly paid over $4.9 million to vendors for goods and services that were never provided and obtained $11.8 million in profits from the sham vendor agreements.

• Enforcement
• On July 11, 2016, the SEC announced that it had resolved an FCPA enforcement action against Johnson Controls for the actions of China Marine through an administrative proceeding.  As part of the cease-and-desist order, Johnson Controls agreed to disgorge $11.8 million and pay a civil penalty of $1.18 million in addition to prejudgment interest of $1,382,561—totaling $14,362,561.  Separately, the DOJ announced that it would decline to pursue charges against Johnson Controls as part of its FCPA Pilot Program on account of the company’s voluntary disclosure, cooperation, and remediation.

• Amount of the Value
• $4.9 million.

• Amount of Business Related to Payment
• $11.8 million.

• Intermediary
• Third-Party Vendors.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 14,362,561

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 14,362,561

Johnson Controls, Inc. 

• Citation
• In the Matter of Johnson Controls, Inc., Admin. Proc. File No. 3-17337 (July 11, 2016).

• Date Filed
• 07/11/2016

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States