A&O Shearman FCPA Digest | SEC v. Universal Corporation (D.D.C. 2010)

Source Documents

Foreign Official
Officials of the Thailand Tobacco Monopoly (“TTM”), officials of the Malawian government, and officials of the Mozambique government.

Nature of Business
Universal Corporation, a holding company incorporated in Virginia, operates primarily through its wholly owned subsidiary, Universal Leaf Tobacco Company, Incorporated (“Universal Leaf”) and Universal Leaf’s domestic and international subsidiaries (collectively, “Universal”). Universal purchases, processes, and sells leaf tobacco worldwide.

Influence to be Obtained
According to the complaint filed by the SEC, payments were made to government officials in Thailand and Mozambique to obtain or retain business and favorable contracts for Universal. Allegedly, between 2000 and 2004, Universal paid approximately $800,000 to government officials in Thailand and more than $165,000 to government officials in Mozambique. Between 2002 and 2003, Universal allegedly paid $850,000 to high‑ranking Malawian government officials. The SEC alleges that employees at multiple levels within Universal, including management at headquarters and employees at wholly‑ and majority‑owned and controlled foreign subsidiaries were responsible for the improper payments. The SEC alleges that Universal made these payments to secure, amongst other things, an exclusive right to purchase tobacco from regional growers and to procure legislation beneficial to the company’s business.

Enforcement
On August 24, 2010, without admitting or denying the SEC’s allegations Universal consented to the entry of a final judgment permanently enjoining it from violating the anti‑bribery, books and records, and internal control provisions of the FCPA. Universal was also ordered to disgorge $4,581,276.

In related criminal proceedings, the DOJ brought charges against Universal Leaf Tabacos, Ltda., a Universal subsidiary in Brazil, and two of Universal competitor Alliance One’s subsidiaries, charging each with violating and conspiring to violate the anti‑bribery provisions of FCPA. They entered into a plea agreement with the DOJ to settle the charges against them.