Johnson Controls, Inc. ("JCI"), headquartered in Wisconsin but operating in 150 countries, was a global provider of automatic temperature control systems for buildings, industrial facilities, and ships. JCI’s shares were registered with the SEC and traded on the New York Stock Exchange. In 2005, JCI acquired York International while York was subject to an FCPA investigation. In October 2007, the SEC brought a settled civil action against York. Under the terms of the settlement, York was enjoined from future violations of the FCPA, ordered to pay $12,032,880 in sanctions, and required to retain an independent compliance monitor. The monitor, whose term ended in 2010, provided the SEC and JCI, as York’s parent, periodic reports on the status and effectiveness of the anti-corruption compliance policies and procedures at York.
From 2007 to 2013, various employees of JCI's Chinese subsidiaries, collectively referred to as “China Marine,” used sham vendors to make improper payments of approximately $4.9 million to employees of Chinese government-owned shipyards, ship-owners, and others. The improper payments were intended as both bribes for the employees of the Chinese shipyards as well as a means for the personal enrichment of certain China Marine employees. JCI made profits of $11.8 million based on those improper payments. JCI only discovered the improper payments in December of 2012 when the first of two anonymous hotline reports about the improper payments were made to the company, and after conducting an internal investigation into the allegations, JCI self-reported its findings to the SEC and DOJ.
In an administrative proceeding on July 11, 2016, the SEC entered a settled cease and desist order against JCI. Under the terms of the order, JCI was ordered to cease and desist violating the books & records and internal controls provisions of the FCPA, ordered to pay disgorgement of $11,800,000 plus prejudgment interest of $1,382,561 and a civil penalty of $1,180,000, and ordered to self-report on the status of the company's compliance programs for a term of one year.
The DOJ closed its investigation without bringing an enforcement action. This is the DOJ’s third declination since announcing its FCPA pilot program in April 2016.
