On October 11, 2024, the Securities and Exchange Commission announced Moog Inc. (“Moog”), a global provider of motion control technology used in aerospace, defense, and industrial markets, agreed to pay approximately $1.7 million to resolve allegations that its wholly owned India-based subsidiary, Moog Motion Controls Private Limited (“Moog Motion Controls”), made improper payments to Indian government officials. The SEC alleged that the bribe payments were made to a variety of officials in India from 2020 to 2022 in order to win contracts with and obtain improper business advantages from the Indian government.
According to the SEC’s order, in 2020 certain Moog Motion Controls employees devised a scheme to obtain a contract from the South Central Railway, which is owned by the Indian government. In order to do that, the Company needed the Research Design and Standards Organization of the Indian Ministry of Railways to approve Moog Motion Controls’ inclusion on a government-approved supplier list. The SEC order states that the company engaged an unnamed third-party agent and agreed to provide that agent 10 percent of the value of any contract executed with the South Central Railway. Shortly thereafter, the Moog brand was added to the supplier list. A month later, Moog Motion Controls won a contract with the South Central Railway. The third-party agent then invoiced Moog Motion Controls for “commission charges,” which several Moog Motion Controls employees allegedly knew would be routed to “government officials to eliminate competition and win contract awards,” according to the SEC.
Separately, the SEC order states that Moog Motion Controls funneled $18,614 through a distributor to an official at the state-owned Hindustan Aeronautics Limited (“HAL”), in exchange for the company receiving a contract with HAL. The distributor disguised the payment with a falsified invoice, according to the SEC. The SEC order also states that Moog Motion Controls employees “engaged in several other attempts to rig the tender bidding process for government contracts.” The SEC noted that these discussions were “freely” discussed at Moog Motion Controls, reflecting a poor tone at the top of the company.
The SEC charged Moog with violating the books and records and internal controls provisions of the Foreign Corrupt Practices Act, for failing to keep accurate business records, falsely recording improper payments as legitimate expenses and commissions, and failing to implement controls over third-party payments. As part of its settlement, Moog consented to entry of the order without admitting or denying the SEC’s findings. In addition to a $1.1 million civil penalty, Moog agreed to pay disgorgement and prejudgment interest totaling to nearly $600,000.