Tyson Settles with DOJ and SEC

10 February 2011 Publication

On February 10, 2011, Tyson Foods Inc. (Tyson), the Arkansas-based food products company, agreed to settle FCPA charges with the United States Department of Justice (DOJ) and Securities and Exchange Commission (SEC) for fines and penalties totaling approximately $5.2 million.

According to the DOJ press release on the matter, Tyson's Mexican subsidiary, Tyson de Mexico, paid approximately $90,000 in bribes to two Mexican government inspection veterinarians between 2004 and 2006, resulting in profits of approximately $880,000. The payments were made both directly to the veterinarians and indirectly through their wives, whom Tyson de Mexico listed on its payroll despite not performing any services for Tyson. When payments to the spouses were terminated in 2004, Tyson representatives agreed to increase the amount paid to the veterinarians to match the amount previously paid to their spouses. According to the DOJ press release, companies that export meat products from Mexico must participate in a Mexican Department of Agriculture inspection program, supervised by government-employed veterinarians, that ensures exports conform to Mexican health and safety laws.

Under its deferred prosecution agreement with the DOJ, filed in U.S. District Court in the District of Columbia, Tyson will pay a $4 million criminal penalty to resolve charges that company representatives paid bribes to government-employed inspection veterinarians in Mexico. Additionally, under the deferred prosecution agreement, Tyson acknowledged responsibility for the actions of its subsidiaries, employees and agents who made improper payments.

According to Assistant Attorney General Lanny Breuer, Tyson "used false books and sham jobs to hide bribe payments made to publicly-employed meat processing plant inspectors in Mexico." Breuer also noted that the criminal penalty reflected the company's disclosure of the conduct and its cooperation with the government's investigation.

In a parallel SEC enforcement action, Tyson settled charges with the SEC under which it agreed to disgorge more than $1.2 million in profits, including pre-judgment interest, for the same conduct. Notably, SEC's press release states that "[i]t was not until two years after Tyson Foods officials first learned about the subsidiary's illicit payments that its counsel instructed Tyson de Mexico to cease making the payments."

The DOJ's press release is available here and the SEC's press release is available here.

The SEC's civil complaint is attached.