$1.5m fine for GM bribe

25 Jan, 2005 10:00 PM

US agricultural product giant Monsanto has been fined $1.5 million for attempting to bribe a senior Indonesian Ministry of Environment official to facilitate the introduction of genetically modified cotton crops in Indonesia.

The case related to a 2002 incident in which a US-based Monsanto manager directed an outside consultant to "incentivise" the official to repeal a decree likely to have an adverse impact on Monsanto's Indonesian business.

Monsanto wanted to change the decree because it required an environmental impact study before GM crops, specifically insect-protected cotton, could be grown in Indonesia.

The Monsanto manager directed the $50,000 payment be made to the official after unsuccessful attempts to lobby the Indonesian government on the matter.

He also directed representatives of the Indonesian consulting company to submit false invoices to Monsanto for consultant fees as reimbursement for the financial payment.

Monsanto said it became aware of financial irregularities in Indonesia as early as 2001 and after carrying out its own investigation informed the US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) of the findings.

Subsequent government investigations found the $50,000 payment falsely entered as consulting services in Monsanto's books and records.

The St Louis-based company terminated the employment of all staff involved after learning of the irregularities.

Despite the $50,000 payment, the Indonesian official did not authorise the repeal of the environmental impact study requirement.

Monsanto accepted responsibility for the manager's actions and agreed to pay $1.5m in penalties for breaching the US Foreign Corrupt Practices Act (FCPA).

Included was an SEC $500,000 civil fine which also related to a series of illegal or questionable payments totalling at least $700,000 to Indonesian government officials between 1997 and 2002.

Monsanto said the earlier payments were financed in part through unauthorised, improperly documented, and inflated sales of Monsanto pesticide products in Indonesia.

Under a Deferred Prosecution Agreement (DPA) with the DOJ, Monsanto agreed to pay a $1m penalty and retain an independent consultant for three years to ensure compliance of the FCPA.

If the company complies with the terms of the agreement for three years, the charges deferred under the DPA will be dismissed.

Monsanto general counsel Charles W Burson said the company had taken remedial action to address what had happened in Indonesia.

"Monsanto accepts full responsibility for these improper activities and we sincerely regret people working on behalf of Monsanto engaged in such behaviour," Mr Burson said.

He said the company had fully cooperated with authorities, beginning with voluntary disclosure, and had made clear it would not tolerate improper activities.

National Network of Concerned Farmers spokeswoman Julie Newman questioned if the practice was also happening in other countries.



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