(CN) - A federal judge approved Hitachi's $19 million settlement with the Securities and Exchange Commission over corruption charges linked to its South African subsidiary.
The SEC filed a complaint against Hitachi in 2005, claiming it engaged in indirect bribery through its subsidiary in South Africa.
To obtain preferential bidding status in post-Apartheid South Africa, Hitachi sold 25 percent of its subsidiary's stock to local investment firm Chancellor House Holdings - a front for the African National Congress, South Africa's ruling party.
Hitachi also paid a "success fee" to Chancellor each time Hitachi won contract thanks to Chancellor's efforts.
In 2007, when Hitachi won power station contracts worth $5.6 billion, it paid Chancellor $1.1 million in success fees and three years later owed Chancellor a divided of $1.7 million. In 2011, it paid Chancellor a second dividend of $3.2 million.
"Hitachi's subsidiary inaccurately recorded both payments in their accounting books, describing the payments as 'consulting fees' and 'dividends declared,' without any reference to the fact that the payments to Chancellor were in exchange for its political influence in assisting Hitachi obtain two government contracts," according to the judgment.
In 2014, Hitachi repurchased Chancellor's shares for $4.4 million. Including dividends, Chancellor received a return of over 5,000 percent on its investment.
The company agreed to settle the SEC's charges this year by paying a $19 million fine. The settlement enjoins Hitachi from violating the Exchange Act's books and records controls.
U.S. District Judge Colleen Kollar-Kotelly approved the settlement Tuesday.
"The $19 million figure represents a compromise figure that the parties arrived at following lengthy negotiations regarding the extent of potential monetary liability for the violations alleged in the complaint and what would be an acceptable penalty in connection with settlement of the charges," she said.
In addition, the injunction "protects the public by warning the public of potential violations and serves as a reminder to other international companies the importance of careful due diligence and other controls to ensure compliance with U.S. anti-corruption laws, including the FCPA," the 8-page opinion concluded.
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