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Thursday
Feb262015

General Cable expects to disgorge $24 million for Angola bribes

Image courtesy of General Cable Kentucky-based General Cable Corporation said it reserved $24 million that's "likely to be disgorged" to the SEC in a possible settlement of FCPA offenses.

In a securities filing Wednesday, the company said the $24 million is the amount of profit it made from bribe-tainted sales in Angola.

In September last year, General Cable said it was investigating possible bribes in Angola, Thailand, and India that were made over at least ten years starting in 2002.

The $24 million accrual is for disgorgement only and "does not include provision for any fines, civil or criminal penalties, or other relief, any or all of which could be substantial," General Cable said Wednesday.

The manufacturer of copper and fiber-optic cables said employees at its subsidiaries in Portugal and Angola made payments to officials of Angola’s public utilities until 2013. Those payments “raise concerns under the FCPA,” General Cable said.

The investigation expanded from Angola to Thailand and India. The company said it self disclosed the findings to the DOJ and SEC.

It said Wednesday the internal investigation focused on "payment practices" involving third-party agents and how payments were recorded in its books and records.

General Cable Corporation trades on the NYSE under the symbol BGC. The company reported revenue of about $7 billion last year. It has a workforce of 13,000.

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Here's the FCPA disclosure from the Form 8-K/A (pdf) (Amended Form 8-K) filed by General Cable with the SEC on February 25, 2015:

As we previously reported, we have been reviewing, with the assistance of external counsel, certain commission payments involving sales to customers of our subsidiary in Angola. The review has focused upon payment practices with respect to employees of public utility companies, use of agents in connection with such payment practices, and the manner in which the payments were reflected in our books and records. We have determined at this time that certain employees in our Portugal and Angola subsidiaries directly and indirectly made or directed payments at various times from 2002 through 2013 to officials of Angola government-owned public utilities that raise concerns under the Foreign Corrupt Practices Act and possibly under the laws of other jurisdictions.

On February 20, 2015, based on the analysis completed at that time with the assistance of our external counsel and forensic accountants, we concluded that we were able to reasonably estimate the amount of profit derived from sales made to the Angolan government-owned public utilities in connection with the payments described above, which we believe are likely to ultimately be disgorged. As a result, we have recorded an estimated charge in the amount of $24 million as an accrual as of December 31, 2014. The accrued amount reflects only an estimate of the Angola-related profits reasonably likely to be disgorged, and does not include provision for any fines, civil or criminal penalties, or other relief, any or all of which could be substantial.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here