Ball Settles with SEC on Books & Records and Internal Control Charges

24 March 2011 Publication

On March 24, Ball Corporation (Ball), a manufacturer of metal packaging for beverages, foods and household products based in Broomfield, Colorado, paid a $300,000 fine to settle civil FCPA books and records and internal control charges with the SEC. According to the SEC Cease-and-Desist Order, Ball, through its Argentine subsidiary Formametal, S.A. (Formametal), a manufacturer of aerosol cans, paid at least ten bribes totaling over $105,000 to employees of the Argentine government to facilitate the importation of prohibited used machinery and the export of raw materials at reduced tariffs. The SEC Order states that although Ball accounting personnel discovered that Formametal employees may have made questionable payments before the acquisition, Ball failed to take sufficient action to ensure that similar activities did not occur at Formametal after the acquisition by Ball. Specifically, the Cease-and-Desist Order alleges that within months of Ball's acquisition of Formametal, the then-Formametal President and then-Formametal Vice President of Institutional Affairs authorized improper payments to Argentine officials. "The payments were invoiced as separate line items described inaccurately as 'fees for customs assistance,' 'customs advisory services,' 'verification charge,' or simply 'fees,' were invoiced in addition to other customs-related fees, and were sometimes in rounded peso amounts. To further obscure that the payments were really bribes, Formametal posted the payments inaccurately identified as 'customs advice' or 'professional fees' to an 'Other Expenses' account or in some instances to an account named for the related equipment." The SEC also alleged that Ball's and Formametal's weak internal controls made it difficult to detect that the subsidiary was repeatedly violating Argentine law through the payments of bribes.