Diebold Has Dismissed Russia Leadership Amid Bribery Probe -CEO
12 November 2010 - 5:43AM
Dow Jones News
Diebold Inc. (DBD) has removed five top-level employees from its
Russian operation, Chief Executive Tom Swidarski said in an
interview, as the company continues an internal investigation
related to potential breaches of the Foreign Corrupt Practices
Act.
The ATM manufacturer and security services company last month
disclosed that the Securities and Exchange Commission and U.S.
Department of Justice had both asked for information on the matter.
Diebold first announced in July that it was investigating payments
the subsidiary had made that may have been in breach of the foreign
bribery rule's provisions on books and records. The company said it
reported its findings to the Justice Department and SEC in
July.
"FCPA is a serious issue," Swidarski said. "We want to be
transparent and we want to be proactive," he said, noting that
Diebold has been investigating other country operations for signs
of irregularities.
In addition to the Russia country manager, Swidarski said the
company fired its sales and accounting managers and a manager in
charge of its relationship with the distributor. Diebold said in a
conference call last month that the payments under investigation
were made "primarily" from 2005 to 2008.
Swidarski said the red flags were first spotted as the company
began looking into acquiring its distributor in Russia. That deal
has since been scrapped, and Diebold let its contract with the
distributor lapse after it expired. The company instead will build
up its direct operation in Russia, something it has done recently
in Turkey and other countries where it sees major growth
opportunities.
"It's going to take several years" to rebuild the service and
sales organization, Swidarski said, adding that Diebold is in the
process of naming a new country manager for Russia.
While Russia contributes a small amount to Diebold's top
line--about $10 million a year, Swidarski said--he said it could be
a significant presence down the line.
"This could be one of the top 10 countries if you look out five
to 10 years," Swidarski said. Currently, it's not even on the
top-50 list, he said.
Diebold announced the SEC's subpoena of information related to
the Russian operation less than five months after reaching a final
settlement on a long-standing case alleging the company had engaged
in a fraudulent accounting scheme to inflate earnings. The company
agreed in June to pay $25 million, without admitting or denying
wrongdoing. Diebold has noted that the charges laid out by the SEC
predate the company's existing leadership.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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