On September 26, 2019, Quad/Graphics Inc., a digital and print marketing company headquartered in Wisconsin, consented to the entry of a U.S. Securities and Exchange Commission order finding violations of the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act. According to the SEC order, Quad/Graphics’ Peruvian subsidiary paid hundreds of thousands of dollars in bribes to government officials in Peru in order to secure contracts with the Peruvian National Institute of Statistics and Information and to avoid contractual penalties related to contracts with the Peruvian Ministry of Education. The SEC order states that the payments were made through “sham companies,” each of which was owned by the same individual. Quad/Graphics also paid bribes to judges via a Peruvian law firm in order to influence the outcome of litigation, according to the SEC order. In addition, the SEC order states that Quad/Graphics’ Chinese subsidiary made improper payments to employees of state-owned and private companies in China in order to obtain business. The payments were made via sales agents, and were improperly described in Quad/Graphic’s books and records as “commissions” to those agents, according to the SEC order.The SEC order states that Quad/Graphics Peru also violated US sanctions and export laws by engaging in commercial transactions with a state-controlled Cuban telecommunications company. Further, the SEC order states that Quad/Graphics violated the FCPA’s books and records provisions by creating “false records to conceal the transactions” with the Cuban telecommunications company.
Without admitting or denying the SEC’s findings, Quad/Graphics agreed to pay a civil penalty of $2 million, $6,936,174 in disgorgement and nearly $1 million in prejudgment interest. In determining these penalties, the SEC considered the fact that Quad/Graphics had self-disclosed the conduct, had cooperated with the investigation, and had taken significant remedial actions. The company has also agreed to report to the SEC on its compliance program for a period of one year.
In a parallel action, the US Department of Justice issued a letter on September 19, 2019, declining to prosecute Quad/Graphics despite having concluded that bribes had been paid by employees of Quad/Graphics’ Peru and China subsidiaries. The DOJ stated that its declination was based in part on: the company’s prompt, voluntary self-disclosure; its thorough cooperation and full remediation, including the termination of relationships with certain third parties and with implicated employees; the company’s lack of prior criminal history; and its agreement to pay disgorgement to the SEC.