The U.S. Securities and Exchange Commission is asking publicly traded tech companies about their relationships with distributors and other business partners outside the U.S. to root out possible corruption, people said.
The SEC began sending letters to companies earlier this year under its mandate to enforce the Foreign Corrupt Practices Act. The law makes it a crime to offer anything of value to a non-U.S. official to obtain business.
The agency’s FCPA division is asking whether the companies have done business with a list of dozens of intermediaries across regions including Asia, Latin America and Africa, some of whom are involved in other investigations. , one of the people said. All acquaintances requested anonymity to discuss confidential matters.
The company that received inquiries about the outsourcing company could not be immediately identified. They have not been accused of wrongdoing and the investigation is in its early stages, but no action may be taken.
Investigations by the agency’s Enforcement Division, which also includes the FCPA Division, could result in fines and other civil penalties against companies and individuals. The SEC declined to comment.
The inquiry came from staff in the SEC’s Fort Worth office, which has been involved in high-profile investigations into corruption allegations. One case resulted in a $144 million settlement by Walmart, which accepted the findings. The firm is also involved in an investigation into software giant Oracle, which reached a second agreement in 2022 to resolve corruption charges. Oracle did not admit or deny wrongdoing.
The letters are part of a raid, which typically involves sending questions to multiple companies in a particular industry. The SEC shares enforcement of the FCPA with the Justice Department and focuses on companies that sell equipment and services to the government across the high-tech supply chain, one of the people said.
In a sign of increased regulatory scrutiny of the sector, the SEC in January accused SAP SE of illegally using intermediaries to obtain business from public sector customers in South Africa, Indonesia and other countries. The German company ultimately paid $220 million to settle the case with the SEC and the Department of Justice.
The technology sector is particularly vulnerable. This is because these companies tend to rely heavily on local distributors and partners to sell their products and services worldwide. Scrutiny of these companies could result in multiple companies being drawn into the investigation.
photograph: Photographer: Andrew Haller/Bloomberg
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