General Cable Corporate Fined Over $75M for Operating without Proper Internal Control

Posted by Teresa Bockwoldt on Tue, Jan 03, 2017 @ 10:58 AM

General Cable Corporate was fined more than $75M for "...not having effective programs & internal controls necessary to proactively address corruption risks and accounting errors." Terrible considering it would have cost them <$50K to become compliant using the Vibato program and they would have also been able to experience the benefits of compliance such as more efficient procedures, shorter close duration, balanced workloads, etc...The CEO & CFO also had to return a total of $5.8M in combined compensation - that they were entitled to - but that they forfeited simply because they failed to follow the rules and comply with the Sarbanes Oxley laws. Expensive lesson...

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FOR IMMEDIATE RELEASE
2016-283

Washington D.C., Dec. 29, 2016

The Securities and Exchange Commission today announced that Kentucky-based General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations related to its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations.

According to the SEC’s orders instituting settled administrative proceedings, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand. General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012.

“General Cable operated globally without the effective compliance programs and internal controls necessary to proactively address corruption risks and accounting errors,” said Stephanie Avakian, Acting Director of the SEC Enforcement Division.

In the FCPA case, General Cable agreed to pay more than $55 million in disgorgement and interest to the SEC as well as a penalty of nearly $20.5 million in a non-prosecution agreement announced today by the Justice Department. General Cable must self-report its FCPA compliance efforts for the next three years. General Cable neither admitted nor denied the SEC’s findings while agreeing to pay the $6.5 million penalty to settle the accounting violations. The SEC considered General Cable’s self-reporting, cooperation, and remedial acts when determining the settlements.

The SEC also charged Karl J. Zimmer, General Cable’s then-senior vice president responsible for sales in Angola. Zimmer agreed to pay a $20,000 penalty without admitting or denying the SEC’s findings that he knowingly circumvented internal accounting controls and caused FCPA violations when he approved certain improper payments.

The SEC’s investigation found no personal misconduct by General Cable’s former CEO Gregory B. Kenny and former CFO Brian J. Robinson, who returned $3.7 million and $2.1 million in compensation received from the company during the period when the accounting violations occurred. Therefore, it wasn’t necessary for the SEC to pursue a clawback action under Section 304(a) of the Sarbanes-Oxley Act.

Read the entire article here: https://www.sec.gov/news/pressrelease/2016-283.html#

 

Tags: SOX, Sarbanes-Oxley, SEC, SEC fines