General Cable Settles with SEC and DOJ for $82.3 Million

General Cable Corporation announced that it has entered into a joint settlement with the Securities and Exchange Commission (“SEC”) and Department of Justice (“DOJ”) for a total payment of $82.3 million to address investigations into violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and separate allegations regarding financial restatements.

In 2014, General Cable voluntarily disclosed FCPA related issues related to improper payments over many years to foreign governments officials related to business in Angola, Bangladesh, China, Egypt, Indonesia and Thailand. The Company was given credit for its transparency and cooperation and has since added a Chief Compliance Officer to oversee an improved overall compliance program. Settlement provisions include a non-prosecution agreement, $51.2 million to disgorge profits and pre-judgment interest of $4.1 million, along with a penalty of $20.5 million.

The SEC specific portion of the settlement included an additional $6.5 million penalty largely related to weak internal controls at a Brazilian subsidiary that failed to detect improper inventory accounting practices.  Material understatements of cost of sales, overstated inventory balances (including manipulations of financial reporting systems to create inventory that did not exist)  and other accounting errors, including purchase price allocation and goodwill valuation, caused material misstatements to net income over the period 2008-2012.

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