Monsanto found guilty of offering bribes to facilitate Bt cotton in Indonesia

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KPK to investigate Monsanto bribery case Muninggar Sri Saraswati

The Jakarta Post, Jakarta

Monday, January 10, 2005

JAKARTA: The Corruption Eradication Commission (KPK) said it was ready to investigate a bribery case involving U.S.-based Monsanto Co., one of the world's leading developers of genetically modified crops.

Erry Riyana Hardjapamekas, the KPK deputy chairman, said on Saturday that the commission is scheduled to meet lawyers representing Monsanto soon.

"They have promised to cooperate," he said, referring to a meeting between KPK and Monsanto's lawyers last year.

According to Erry, his commission had sent official letters to the United States Securities and Exchange Commission as well as the Department of Justice, via the U.S. Embassy in Indonesia, but there had not yet been a response.

The commission will focus on the bribery case, which allegedly involved a significant number of senior officials with the Office of the State Minister for Environment and the agriculture ministry here, he added.

Monsanto, which was charged with violating the U.S. Foreign Corrupt Practices Act, has agreed to pay a US$1 million penalty to settle charges of bribing Indonesian government officials.

According to the website of the U.S. Securities and Exchange Commission, the bribery case started in 1998 when Monsanto wanted Indonesia to accept genetically-modified (GM) crops.

It hired a Jakarta-based investment consulting firm to lobby for legislation and ministerial decrees favorable to the development of GM crops here.

"In February of 2001, Monsanto obtained limited approval from Indonesia's Ministry of Agriculture, for farmers in South Sulawesi, Indonesia, to grow its Bollgard Cotton, a GM crop," the website said.

But later in the year, the environment ministry issued a decree requiring environmental impact assessment prior to the cultivation of the Monsanto's Bollgard Cotton in this country.

As the decree was likely to have an adverse effect on Monsanto's business interests in Indonesia, Monsanto lobbied the environment ministry to withdraw the decree. People from Monsanto met with a senior environment ministry official on several occasions.

Sometime in February 2002, an employee of the consulting firm which represented Monsanto visited the senior official at his home and gave him an envelope containing $50,000 in $100 bills.

Despite the cash payment, the senior official never repealed the AMDAL requirement for Monsanto's products.

The website also disclosed that from 1997 to 2002, Monsanto made at least $700,000 in illicit payments to at least 140 current and former Indonesian government officials and their family members.

The largest single set of payments was for the purchase of land and the design and construction of a house in the name of a wife of a senior Ministry of Agriculture official, which cost Monsanto $373,990.

Other improper payments included, among others, payments to a senior official of Budget Allocations at the National Planning and Development Agency (Bappenas), totaling $86,690, and payments to other Ministry of Agriculture officials, totaling $8,100.

Officials of the South Sulawesi office of the agriculture ministry also received approximately $29,500 from Monsanto.

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Monsanto pays $1.5m bribe penalty

Agence France Press / IAfrica, South Africa, 7 Jan 2005

http://business.iafrica.com/news/402364.htm

American agribusiness giant Monsanto has agreed to pay a $1-million penalty to settle charges of bribing the Indonesian government, the US Justice Department said Thursday.

A criminal information filed in the District of Columbia charged the Monsanto Company with violating the Foreign Corrupt Practices Act (FCPA) in connection with an "illegal payment" of $50 000 to a senior Indonesian Ministry of Environment official,

The bribe made by a Monsanto employee was aimed at facilitating the cultivation of genetically modified crops and falsely certified as "consultant fees" in the company's books and records, Assistant Attorney General Christopher Wray said.

The St. Louis, Missouri-based company "agreed to accept responsibility for the conduct of its employees in paying the bribe and making the false books and records entries," the Justice Department said in a statement.

It also agreed to adopt internal compliance measures and cooperate with ongoing criminal and civil investigations by the Securities and Exchange Commission.

An independent compliance expert will be chosen to audit the company's compliance program and monitor its implementation of and compliance with new internal policies and procedures, the department said.

"Monsanto has also agreed to pay a monetary penalty of one million dollars," it added.

Separately, Monsanto settled related civil enforcement proceedings by the Securities and Exchange Commission, which issued an administrative order finding that the company violated Foreign Corrupt Practices Act provisions.

"Monsanto consented to the entry of a final judgment in the federal lawsuit requiring it to pay a 500 000 civil penalty and consented to the Commission's issuance of its administrative order," the statement said.

Wray warned that "companies cannot bribe their way into favorable treatment by foreign officials.

"Today's agreement, which requires Monsanto's full cooperation, acceptance of responsibility, and significant compliance and monitoring steps, will help ensure that such dishonest and illegal activity does not occur in the future."

In a statement, Monsanto said it regretted the actions of those involved the activity but was accepting responsibility.

"Monsanto accepts full responsibility for these improper activities, and we sincerely regret that people working on behalf of Monsanto engaged in such behavior," said Monsanto's general counsel Charles Burson.

"The company has taken remedial actions to address the activities in Indonesia. At every stage of this process -- beginning with our voluntary disclosure and throughout the governmental investigations and settlement process -- Monsanto has been fully cooperative, and has made clear that improper activities will not be tolerated by the company. We are pleased today to begin the process of putting these matters to rest."

The Justice Department said it had agreed to defer prosecution on the criminal information for three years, saying it would dismiss it after the period if Monsanto fully complied with the terms of the agreement.

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SEC SUES MONSANTO COMPANY FOR PAYING A BRIBE

U.S. Securities and Exchange Commission, SEC News Digest, 6 Jan 2005
http://www.sec.gov/news/digest/dig010605.txt

MONSANTO SETTLES ACTION AND AGREES TO PAY A $500,000 PENALTY MONSANTO ALSO ENTERS INTO DEFERRED PROSECUTION AGREEMENT WITH DEPARTMENT OF JUSTICE

On January 6, the Commission filed two settled enforcement proceedings charging Monsanto Company, a global producer of technology-based solutions and agricultural products headquartered in St. Louis, Missouri, with making illicit payments in violation of the Foreign Corrupt Practices Act (FCPA). First, the Commission filed a lawsuit in the U.S. District Court for the District of Columbia charging Monsanto with violating the FCPA and seeking a civil penalty. Second, the Commission issued an administrative order finding that Monsanto violated the anti- bribery, books-and-records, and internal-controls provisions of the FCPA, ordering Monsanto to cease and desist from such violations, and requiring Monsanto to retain an independent consultant to review and make recommendations concerning the company's FCPA compliance policies and procedures. Without admitting or denying the Commission's charges, Monsanto consented to the entry of a final judgment in the federal lawsuit requiring it to pay a $500,000 civil penalty and consented to the Commission's issuance of its administrative order.

In both its federal court complaint and its administrative order, the Commission charged that, in 2002, a senior Monsanto manager, based in the United States, authorized and directed an Indonesian consulting firm to make an illegal payment totaling $50,000 to a senior Indonesian Ministry of Environment official (the senior Environment Official). The bribe was made to influence the senior Environment Official to repeal an unfavorable decree that was likely to have an adverse effect on Monsanto's business. Although the payment was made, the unfavorable decree was not repealed. The Commission further charged that the senior Monsanto manager devised a scheme whereby false invoices were submitted to Monsanto and the senior Monsanto manager approved the invoices for payment.

In addition, the Commission charged that, from 1997 to 2002, Monsanto inaccurately recorded, or failed to record, in its books and records approximately $700,000 of illegal or questionable payments made to at least 140 current and former Indonesian government officials and their family members. The approximate $700,000 was derived from a bogus product registration scheme undertaken by two Indonesian entities owned or controlled by Monsanto. The largest single set of payments was for the purchase of land and the design and construction of a house in the name of the wife of a senior Ministry of Agriculture official. The Commission further charged that, in certain instances, entries were made in the books and records of the two Indonesian entities that concealed the source, use and true nature of these payments.

As a result of the conduct described above, the Commission charged that Monsanto violated the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934). The Commission further charged that Monsanto violated Section 13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep books, records, and accounts, which accurately and fairly reflect their transactions and disposition of their assets. The Commission further charged that Monsanto violated Section 13(b)(2)(B) of the Exchange Act, which requires all reporting companies to devise and maintain a system of internal accounting controls sufficient to, among other things, provide reasonable assurances that transactions are properly recorded. The Commission further charged that Monsanto violated Section 13(b)(5) of the Exchange Act, which prohibits any person or company from knowingly circumventing or knowingly failing to implement a system of internal accounting controls as described in Section 13(b)(2)(B), or knowingly falsifying any book, record, or account as described in Section 13(b)(2)(A). Finally, the Commission charged that Monsanto violated Rule 13b2-1 of the Exchange Act, which prohibits any person or company from, directly or indirectly, falsifying or causing to be falsified, any book, record or account subject to Section 13(b)(2)(A).

In determining to accept Monsanto's settlement offer, the Commission considered the cooperation that Monsanto provided the Commission staff during its investigation.

In a related proceeding, the United States Department of Justice has entered into an agreement with Monsanto Company to defer prosecution on charges of violating the anti-bribery and books and records provisions of the FCPA. Under the Agreement, the Justice Department has filed a criminal information charging the company; Monsanto will pay a $1 million monetary penalty; and Monsanto will retain for a period of three years an independent compliance expert to audit the company's compliance program and monitor its implementation of and compliance with new internal policies and procedures. The Commission wishes to thank the United States Department of Justice for their cooperation and assistance in this matter. The Commission is continuing its investigation in this matter. [SEC v. Monsanto Company, Case No. 1:05CV00014 (U.S.D.C., D.D.C.)] (LR- 19023; AAE Rel. 2159); (Administrative Proceeding - (Rel. 34-50978; AAE Rel. 2160; File No. 3-11789)

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Monsanto Announces Settlements with DOJ and SEC Related to Indonesia

Monsanto USA, 6 Jan 2005

http://www.monsanto.com/monsanto/layout/media/05/01-06-05.a sp

ST. LOUIS (Jan. 6, 2005) - Monsanto Company (NYSE: MON) today announced it has resolved U.S. Securities and Exchange Commission (SEC) and U.S. Department of Justice (DOJ) investigations related to Monsanto's discovering and reporting to the SEC Staff and DOJ improper payments and related financial irregularities in connection with the Company's Indonesian affiliates.

In its settlement with the SEC, Monsanto shall cease and desist from any further violations of the Foreign Corrupt Practices Act (FCPA) and pay a penalty of $500,000. Monsanto also agreed to retain for a period of three years an independent compliance consultant to review and evaluate the Company's policies and procedures to ensure compliance with the FCPA.

Under the Deferred Prosecution Agreement (DPA) with DOJ, which is subject to judicial approval, Monsanto agreed to: pay a penalty of $1 million; continue the Company's compliance program, which is mandatory for all employees; and retain an independent compliance consultant. The DPA requires that for three years the independent consultant review the Company's policies and procedures as they relate to FCPA compliance. If the Company complies with the terms of the agreement for three years, the charges deferred under the DPA will be permanently dismissed. The DPA and the SEC Order both reference Monsanto's cooperation with the government's investigations.

"Monsanto accepts full responsibility for these improper activities, and we sincerely regret that people working on behalf of Monsanto engaged in such behavior," said Monsanto's General Counsel Charles W. Burson. "The Company has taken remedial actions to address the activities in Indonesia. At every stage of this process - beginning with our voluntary disclosure and throughout the governmental investigations and settlement process - Monsanto has been fully cooperative, and has made clear that improper activities will not be tolerated by the Company. We are pleased today to begin the process of putting these matters to rest."

The settlement with DOJ centers on an illegal $50,000 payment in 2002 to an Indonesian government official made by a former outside consultant of the Company's Indonesian affiliates at the direction of a former U.S.- based senior Monsanto manager. The payment, which the senior Monsanto manager told the consulting firm employee not to discuss with any other Monsanto employee, was made to influence an Indonesian official to repeal or amend an unfavorable decree that was likely to have an adverse effect on Monsanto's business in that country. Despite the payment, the official never repealed or amended the decree. The books and records violation stems from the fact that the senior Monsanto manager and outside consultant presented false information to obtain a reimbursement for the improper payment which, in turn, was recorded as a legitimate business expense.

The SEC Order includes charges for the aforementioned $50,000 payment and related books and records and internal controls violations. The Order also includes additional charges for books and records and internal controls violations involving a series of illegal or questionable payments totaling at least $700,000 made to various Indonesian government officials between 1997 and 2002. These payments were financed, in part, through unauthorized, improperly documented, and inflated sales of Monsanto's pesticide products in Indonesia. During this period, the Indonesian affiliates violated the accounting policies, controls, and procedures of Monsanto.

Monsanto became aware of financial irregularities in its Indonesian affiliates in 2001. Monsanto began an internal investigation, which continued at the direction of the Board of Directors. The Company voluntarily notified the SEC Staff and DOJ of the results of this investigation, and disclosed the books and records and compliance irregularities involving the Indonesian affiliates. Subsequent governmental investigations revealed the $50,000 payment to the Indonesian official. Monsanto updated its disclosures as this additional information was developed, and cooperated with both the SEC and DOJ throughout their investigations.

Since learning of the irregularities, Monsanto has terminated those employees involved with the improper activities, as well as the outside consultant. The Company has also revised its accounting treatment of subject transactions, restructured its Indonesian affiliates, appointed a new Director of Business Conduct, and implemented an improved and expanded FCPA compliance program worldwide.

Net combined revenues from customers in Indonesia were less than 1 percent of total corporate revenues during the past four years.

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. For more information on Monsanto, see: www.monsanto.com.

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