Gunmaker Smith & Wesson Holding Corp. has agreed to pay $2 million to settle U.S. Securities and Exchange Commission charges that it violated the Foreign Corrupt Practices Act by bribing foreign officials in several countries, the agency said Monday.
According to the SEC’s cease-and-deist order in the case, Springfield, Massachusetts-based Smith & Wesson sought to break into international markets from 2007 through early 2010 by engaging “in a pervasive practice of making, authorizing and offering improper payments to foreign government officials” to obtain business, although only one of the contracts was fulfilled before the unlawful activity was identified.
In 2008, for instance, the company authorized a third-party agent to provide guns valued at more than $11,000 to Pakistani police officials, leading to the sale of 548 pistols to the Pakistani police for $210,980, which generated a $107,852 profit, said the SEC’s order.
The order says Smith & Wesson also made improper payments to officials in Turkey and Indonesia, and authorized such payments to foreign officials in Nepal and Bangladesh.
The SEC said the company has taken prompt action to remediate its immediate FCPA issues, including conducting an internal investigation, terminating its entire international sales staff, terminating pending international sales transactions and re-evaluating the markets in which it sought international sales.
“This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales,” Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA unit, said in a statement. “When a company makes the strategic decision to sell its products overseas, it must ensure that the right internal controls are in place and operating.”
Smith & Wesson consented to the settlement without admitting or denying the inquiry’s findings, the company said Monday in a statement. “We are pleased to have concluded this matter with the SEC and believe that the settlement we have agreed upon is in the best interests of Smith & Wesson and its shareholders,” Smith & Wesson President and CEO P. James Debney said in the statement. “Today’s announcement brings to conclusion a legacy issue for our company that commenced more than four years ago, and we are pleased to now finally put this matter behind us.”
The U.S. Department of Justice said last week that the former president and CEO of Oklahoma City-based BizJet International Sales & Support Inc. pleaded guilty in federal court to violating the FCPA in a scheme to bribe Mexican and Panamanian government officials.