On August 7, 2013, Archer Daniels Midland Company (ADM) disclosed in its SEC Form 10-Q that it had set aside $54 million to cover any monetary penalties that could be imposed by DOJ and the SEC in connection with an ongoing FCPA investigation. That amount was more than double the $25 million that ADM had disclosed it was setting aside just three months earlier in its May 7 Form 10-Q. Although there is little publicly-available information the exact reason why ADM raised its reserves, the increase may be attributable to the fact that the FCPA violations are more serious than what the company had previously believed.
ADM had disclosed in August 2011 that it had initiated an internal investigation in 2008 focused primarily on transactions involving grain and feed exports that may have violated the FCPA. The company had notified DOJ and the SEC about its internal review in March 2009. In November 2012, ADM disclosed that it had entered negotiations with the agencies to resolve the FCPA matters.
There have not yet been any publicly reported FCPA settlements with or charges brought against companies in the agribusiness industry. That fact is somewhat of a surprise, given the total value of agricultural products that U.S. companies export each year (over $115 billion in 2010) and the high volume of exports to countries known for high rates of corruption ($18 billion in exports to China; $17 billion to Mexico; and $4.2 billion to South American countries). However, as discussed in this article, the impending ADM settlement and the DOJ and SEC’s use of “industry sweeps” suggest that there may be more FCPA enforcement actions to come against companies in the agribusiness industry. Companies in this industry should be on notice of the recent developments with ADM and take the necessary steps to make sure their business practices are FCPA-compliant.