A&O Shearman FCPA Digest | SEC v. Tyson Foods, Inc. (D.D.C. 2011)

Source Documents

Foreign Official
Veterinarians responsible for certifying meat exports under a federal inspection program in Mexico.

Nature of Business
Tyson Foods, Inc. (“Tyson”), headquartered in Arkansas, produces protein-based and prepared food products. Tyson de Mexico, Tyson’s wholly-owned subsidiary, operates three meat-processing facilities in Mexico and processes prepared foods for sale in Mexico and abroad.

Influence to be Obtained
The SEC alleges that, from 2004 to 2006, Tyson executives permitted Tyson de Mexico to make illegal payments to Mexican government‑employed veterinarians responsible for administering a federal inspection program for meat exports at Tyson de Mexico’s plants. Some of these payments were allegedly concealed in the form of salaries paid to the wives of the veterinarians for services never performed. The complaint further alleges that, in August 2004, Tyson executives terminated the salaries of the veterinarians’ wives and increased the amount of the service invoices paid to the veterinarians by the sum of the wives’ salaries. The improper payments were purportedly recorded as legitimate expenses in Tyson de Mexico’s books and records.

Enforcement
On February 10, 2011, the SEC filed a civil complaint against Tyson. Tyson consented to entry of a final judgment on February 14, 2011 without admitting or denying the SEC’s allegations. The judgment requires Tyson to pay a $1,214,477 penalty (including disgorgement of profits and prejudgment interest), engage in various compliance activities, and periodically report such activities to the SEC. In a related DOJ action, Tyson signed a deferred prosecution agreement that requires Tyson to pay a $4 million penalty.