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Dun & Bradstreet pays $9 million to resolve China FCPA offenses

Dun & Bradstreet Corporation agreed Monday to pay more than $9 million to resolve Foreign Corrupt Practices Act charges arising from improper payments made by two Chinese subsidiaries.

The subsidiaries "used third-party agents to make unlawful payments to obtain data vital to Dun & Bradstreet’s business as a provider of business financial information," the SEC said.

The investigation into DnB's China practices started in 2012.

In several securities filings, including one in February this year, Dun & Bradstreet said it shut down its Roadway subsidiary's China operations in March 2012.

The action followed an investigation into possible FCPA violations and breaches of China's data privacy laws.

In September 2012, the Shanghai District Prosecutor charged Roadway and five former employees with illegally obtaining private information of Chinese citizens.

The China court fined Roadway $160,000 and jailed the former employees.

Dun & Bradstreet self reported the possible FCPA offenses to the DOJ and SEC.

The SEC said Monday it fined Dun & Bradstreet $2 million as a civil penalty for the FCPA violations and ordered the company to disgorge about $6 million and pay prejudgment interest of $1.1 million.

The SEC resolved the case through an internal administrative order (pdf) and didn't go to court.

Another Dun & Bradstreet subsidiary in China was called HDBC. It was formed in 2006. DnB owned 51 percent of the JV.

During due diligence of two local partners, Dun & Bradstreet had concerns about improper payments to government officials.

But after HDBC was formed, Dun & Bradstreet allowed the local China partners to operate the same way for at least two years, the SEC said. They continued bribing government officials in exchange for private information about individuals.

"These improper payments were falsely recorded as legitimate business expenses," the SEC said.

"Dun & Bradstreet failed to take appropriate action to stop the improper payments or the false entries into the subsidiary’s books and records, which continued for several years post-acquisition," the SEC said Monday.


The DOJ issued a declination letter (pdf) Monday to Dun & Bradstreet. 

"[W]e have declined prosecution consistent with the FCPA Corporate Enforcement Policy," the letter said.

The DOJ cited DnB's prompt voluntary self-disclosure, its thorough investigation, and its full cooperation, including "making current and former employees available for interviews, and translating foreign language documents to English."

Dun & Bradstreet enhanced its compliance program and internal accounting controls and fired 11 individuals involved in the China misconduct, the DOJ said. It disciplined other employees by "reducing bonuses, reducing salaries, lowering performance reviews, and formally reprimanding them."

The DOJ also noted Dun & Bradstreet's disgorgement to the SEC.

Dun & Bradstreet trades on the NYSE under the symbol DNB.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

Reader Comments (3)

If corruption is such a key part of their business model and their employees are comfortable facilitating corrupt payments why would you believe the same employees were not above taking payments to give the rating companies are seeking?
April 23, 2018 | Unregistered CommenterConcerned
Let me get this straight. A provider of vital info relied upon for third party due diligence for purposes of commercial viability, AML, Human Rights Abuses, and Anti-Bribery and Corruption, was using corrupt practices to obtain the vitals on other companies. Corporate world never ceases to amaze.
April 24, 2018 | Unregistered CommenterMark Speck
My biggest concern with this relates to D&B's role as a major data provider for due diligence. I bet most folks reading this represent companies or firms that use D&B to vet parties for deals, positions, etc. Even when you use other sources, many of them include D&B data.

After D&B's "possible FCPA violation" can we still rely on D&B's China data? Is data obtained via bribery less reliable than data obtained lawfully? How many data records were impacted? Has D&B independently verified those records or purged them?

DOJ and SEC will only give D&B a slap on the wrist. There's almost a congratulatory tone in the descriptions of D&B's self-reporting and efforts to root out corruption. Even if data providers like D&B aren't held to a higher legal standard than others, they should be held to a higher business standard by us, their customers. Corruption by these companies can have a domino effect and disrupt customers' compliance. When they obtain data via bribery, that lessens its veracity which reduces the effectiveness of their product and our due diligence. So will any of us publicly shame D&B and/or encourage our clients to go elsewhere?
April 25, 2018 | Unregistered CommenterD. Green
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