Smith & Wesson To Pay Over $2 Million To SEC For Bribing Governments

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According to the Securities and Exchange Commission (SEC), while trying to lock down deals with certain governments, Smith & Wesson bribed or attempted to bribe foreign officials through personal gifts of cash and weapons. Apparently, the company earned more than $100,000 as a result of the bribes, and will be forfeiting related profits, interest on the profits, and a $1.9 million penalty for violating the Foreign Corrupt Practices Act (FCPA).

As part of the deal reached with the U.S. government, Smith & Wesson will have to report their FCPA compliance efforts to the SEC for two years. They have not admitted or denied guilt, but have fired their entire international sales staff as a result of the allegations.

According to the press release by the SEC,

According to the SEC’s order instituting a settled administrative proceeding, the Springfield, Mass.-based firearms manufacturer sought to break into new markets overseas starting in 2007 and continuing into early 2010. During that period, Smith & Wesson’s international sales staff engaged in a pervasive effort to attract new business by offering, authorizing, or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia, and other foreign countries.

There is evidence of at least one successful bribery attempt, in Pakistan:

According to the SEC’s order, Smith & Wesson retained a third-party agent in Pakistan in 2008 to help the company obtain a deal to sell firearms to a Pakistani police department. Smith & Wesson officials authorized the agent to provide more than $11,000 worth of guns to Pakistani police officials as gifts, and then make additional cash payments. Smith & Wesson ultimately won a contract to sell 548 pistols to the Pakistani police for a profit of $107,852.

Smith & Wesson seem to want to wash their hands of the entire incident. In a press release to investors, CEO and President James Debney states, “We are pleased to have concluded this matter with the SEC and believe that the settlement we have agreed upon is in the best interests of Smith & Wesson and its shareholders. Today’s announcement brings to conclusion a legacy issue for our company that commenced more than four years ago, and we are pleased to now finally put this matter behind us.”

Due to the violation of anti-bribery provisions of the Securities Exchange Act, they will be paying “$107,852 in disgorgement, $21,040 in prejudgment interest, and a $1.906 million penalty.” The total comes to $2,034,892.

Meanwhile, we continue to allow bribery in the United States of our own legislators, in the way of campaign contributions for direct action.