Hitachi, Ltd. is a multinational conglomerate that, among other things, designs and constructs power stations. The company is headquartered in Tokyo, Japan and, including its subsidiaries, has more than 320,000 employees worldwide. At the time of the violations, and from at least January 1, 2005 until April 26, 2012, Hitachi's American Depositary Shares ("ADSs") were registered with the SEC and traded on the New York Stock Exchange. On April 16, 2012, Hitachi filed a Form 25 with the SEC voluntarily withdrawing its ADSs from listing and registration. The delisting was effective ten days later, on April 26, 2012. Termination of Hitachi's registration and duty to file reports with the SEC became effective on July 26, 2012.
Hitachi Power Europe GmbH ("HPE") was an international supplier of boilers for power stations. Before 2006, HPE was known as Babcock Hitachi Europe GmbH. At all relevant times, HPE was a wholly-owned subsidiary of Hitachi based in Germany.
Hitachi Power Africa (Pty) Ltd. ("HPA") executed power station orders in South Africa. HPA was established in 2005 and, at all relevant times, was a majority-owned subsidiary of HPE based in South Africa.
In 2005, Hitachi created HPA for the purpose of establishing a local presence in that country to pursue lucrative public and private contracts, including government contracts to build two new major power stations. Hitachi sold 25% of the stock in HPA to Chancellor House Holdings (Pty) Ltd. ("Chancellor"), a local South African company that was a front for the African National Congress ("ANC"), South Africa's ruling political party. Hitachi's arrangement gave Chancellor - and by proxy the ANC - the ability to share in the profits from any power station contracts secured by Hitachi. Hitachi also entered into an undisclosed "success fee" arrangement with Chancellor, wherein Chancellor would be entitled to "success fees" in the event that the contract awards were "substantially as a result" of Chancellor's efforts. As a result, Hitachi was awarded power station contracts in South Africa worth approximately $5.6 billion. In April and July 2008, Hitachi paid the ANC, through Chancellor, "success fees" totaling approximately $1 million. Based on Chancellor's 25% stake in the subsidiary, on or about June 29, 2012, Hitachi paid Chancellor approximately $5,027,170 in what Hitachi deemed dividends and interest on such dividends. Approximately nineteen months later, in February 2014, HPE repurchased Chancellor's shares in HPA - shares that Chancellor had purchased in 2005 for only approximately $190,819— for approximately $4.4 million. Thus, in total, Chancellor received approximately $10.5 million from Hitachi, a return of over 5,000% on its investment in HPA. It should be noted that this sale of Chancellor's 25% stake occured after Hitachi stopped being required to file with the SEC, so the profits realized are not included in the improper payments totals.
On September 28, 2015, the SEC filed a two count Complaint in the District of Columbia against Hitachi alleging violations of the books & records and internal controls provisions of the FCPA. On the same date, Hitachi entered into a Consent Agreement with the SEC. Under the terms of the agreement and without admitting or denying the allegations in the complaint, Hitachi agreed to be enjoined from future violations of the FCPA and agreed to pay a civil penalty of $19 million. The court entered final judgment in the case on November 24, 2015.
