US Gunmaker Fined for Bribing Indonesia, Pakistan Officials

Jakarta Globe – AFP, Jul 29, 2014

A club member fires a pistol. (Reuters Photo/Andy Clark)

Washington. US gunmaker Smith & Wesson was hit with $2 million in fines Monday for bribing officials in Indonesia, Pakistan and other countries to gain sales deals.

The US Securities and Exchange Commission accused the company, whose handguns are popular in law enforcement and military services, of facilitating bribes of $11,000 worth of cash and free guns to Pakistan police officials in 2008 to obtain a supply contract.

One year later, the SEC said, Smith & Wesson employees made or authorized bribes in Indonesia to win a contract with a local police department, though the deal ultimately fell through.

Other attempts to pay off officials via third-party agents were made in Turkey, Nepal and Bangladesh, the SEC said.

The SEC found that the company’s actions, successful or not in gaining business, violated the US Foreign Corrupt Practices Act, which aims to eliminate bribery and graft as a crucial factor in business competition internationally.

Smith & Wesson did not admit or deny the findings by the SEC, but agreed to pay $2.0 million in penalties and illicit gains to settle the charges.

The SEC said the company had taken action to halt pending sales transactions when it learned of the bribery by its staff, and fired its entire international sales staff to begin addressing the problem.

“This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales,” said Kara Brockmeyer of the SEC Enforcement Division.

“When a company makes the strategic decision to sell its products overseas, it must ensure that the right internal controls are in place and operating,” she said in a statement.

Agence France-Presse