Enforcement Action

 

Docket or Case Number:    11-cr-00037

Court:    District of Columbia

Initiation Date:    02/04/2011  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Denis J. McInerney, Chief, Fraud Section, Criminal Division
  • Charles E. Duross, Deputy Chief, Fraud Section, Criminal Division
  • Kathleen M. Hamann, Trial Attorney, Fraud Section, Criminal Division

Assisting Agencies:    US Securities and Exchange Commission

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Tyson Foods, Inc., was a global multi-industry company engaged in the production of various meat proteins and the second-largest food production company in the Fortune 500. The Company's operations were conducted in four segments: Chicken, Beef, Pork and Prepared Foods. The Company had approximately 117,000 employees at more than 400 facilities and offices in the United States and abroad.

Tyson de Mexico was a wholly-owned subsidiary of Tyson Foods. It was headquartered in Gomez Palacio, Mexico and consisted of three processing facilities—La Citra; El Porvenir; and La Popular. Tyson de Mexico produced protein-based and prepared food products that comprised approximately 1% of Tyson Foods' total net sales.

Betweeen fiscal 2004 - 2006 Tyson de Mexico made approximately $90,000 in illicit payments to the Mexican Veterinarians in charge of meat inspection. The payments were made through inflated invoices and "salaries" paid to the wives of the veterinarians, even though the wives did not perform any services for Tyson de Mexico.

On February 10, 2011, the DOJ filed a two count Information in the District of Columbia against Tyson Foods alleging violations of the anti-bribery, books & records, and internal controls provisions of the FCPA. On the same date, Tyson Foods entered into a two year Deferred Prosecution agreement (DPA) with the DOJ. Under the terms of the agreement, Tyson Foods agreed to pay a $4 million criminal fine.

In a separate but related proceeding, Tyson Foods also consented to a final judgment with the SEC, agreeing to pay disgorgement of $880,786, plus prejudgment interest of $333,691, and be permanently enjoined from future violations of the FCPA.

Country(ies) involved:    Mexico

Sanction to Bribe Ratio:    $4,000,000 / $350,000 = 1142.86 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $4,000,000 / $880,000 = 454.55 %

Number of Related Enforcement Actions (Including This Enforcement Action):    2

Country(ies) involved:    Mexico

Total $ Bribery Payments:    $350,000

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $880,000

Total $ Monetary Sanctions:    $5,214,477

Sanction to Bribe Ratio:    $5,214,477 / $350,000 = (1489.85 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $5,214,477 / $880,000 = (592.55 %)

Name:    Tyson Foods, Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Public Company

FCPA Claims:    Anti-Bribery, Conspiracy (18 U.S.C. 371) ; Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1) ; Books & Records, Conspiracy (18 U.S.C. 371) ; Anti-Bribery, Aiding and Abetting/Causing (18 U.S.C. § 2, 15 U.S.C. §§ 78dd-1, 78dd-2, and/or 78dd-3) ; Books & Records, Primary, Knowing Violation (15 U.S.C. § 78m (b)(5)) ; Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer ; Conspirator ; Aider & Abettor/Cause/Control Person ; Person (Books & Records, Internal Controls)

Period of Bribery:   1994 - 2006

Total Bribery Payments:    $350,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $880,000

Country(ies) involved:    Mexico

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Veterinarians; Tipo Inspeccion Federal

Defendant-Related Entities Involved in the Misconduct:    Tyson de Mexico - Subsidiary

Third-Party Intermediary:    N/A

Type of Bribe:   Money, Improper Employment

Cash, Wire or Check:    No Available

Purpose of Bribe:    Facilitate import/export/delivery of products, Obtain/retain business

TRANSACTION OVERVIEW
Improper Payments to Mexican State Veterinarians

Period of Bribery:   2004 – 2006

Total Bribery Payments:    $90,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $880,000

Country(ies) involved:    Mexico

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Veterinarians; Tipo Inspeccion Federal;

Defendant-Related Entities Involved in the Misconduct:    Tyson de Mexico - Subsidiary

Third Party Intermediary:    N/A

Type of Bribe:   Money, Improper Employment

Cash, Wire or Check:    N/A

Purpose of Bribe:    Facilitate import/export/delivery of products

TRANSACTION OVERVIEW
Additional Improper Payments to Mexican State Veterinarians

Period of Bribery:   1994 – 2004

Total Bribery Payments:    $260,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Mexico

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Veterinarians; Tipo Inspeccion Federal;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Tyson Foods, Inc.

Subsidiary:  Tyson de Mexico

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    Yes
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     Yes

Type of Transaction:    Acquisition


Successor(s):   Tyson Foods, Inc.

Predecessor:  Tyson de Mexico

  • Nature of Misconduct    N/A
  • Quality of Due Diligence:    N/A
  • Voluntary Disclosure by Successor in Connection with the Transaction:    No
  • DOJ Opinion Sought in Connection with Transaction:    No
  • Successor Liable for Predecessor Misconduct? :    No

  

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Tyson Foods, Inc.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Tyson Foods, Inc.    

Total Monetary Sanctions for the Action:    $4,000,000

Case Status:    Resolved


Disposition:    Deferred Prosecution Agreement

Date of Disposition:    02/04/2011

Tyson Foods, Inc.

—  Total Monetary Sanctions for Defendant:    $4,000,000

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Self-reporting

—  Admission of Guilt/Acceptance of Responsibility:    Yes

No Document Title Date Category