Monsanto Busted for Bribing Indonesian Official

CORPORATE CRIME REPORTER

Monsanto Gets Deferred Prosecution For Bribery

19 Corporate Crime Reporter 1(1), January 10, 2005

The Justice Department charged Monsanto Company with violating the Foreign
Corrupt Practices Act (FCPA) in connection with an illegal payment of
$50,000 to a senior Indonesian Ministry of Environment official, and the
false certification of the bribe as "consultant fees" in the company's books
and records.

Federal officials charged Monsanto, the St. Louis, Missouri-based
multinational giant, with violating the anti-bribery and false books and
records provisions of the Foreign Corrupt Practices Act.

But the company did not have to plead guilty to the charge ­ instead it
entered into the now ubiquitous deferred prosecution agreement.

"Companies cannot bribe their way into favorable treatment by foreign
officials," said Assistant Attorney General Wray.

Except that the Justice Department said that it would dismiss the criminal
information after three years if Monsanto fully complies with the terms of
the deferred prosecution agreement, which requires the company to pay a $1
million penalty.

Under the deferred prosecution agreement, Monsanto agreed ³to accept
responsibility for the conduct of its employees in paying the bribe and
making the false books and records entries, adopt internal compliance
measures and cooperate with ongoing criminal and SEC civil investigations.²

An independent compliance expert will be chosen to audit the company's
compliance program and monitor its implementation of and compliance with new
internal policies and procedures.
Federal officials alleged that Monsanto hired an Indonesian consulting
company to assist it in obtaining various Indonesian governmental approvals and licenses
necessary to sell its products in Indonesia.

At the time, the Indonesian government required an environmental impact
study before authorizing the cultivation of genetically modified crops.

After a change in governments in Indonesia, Monsanto sought,
unsuccessfully, to have the new government, in which the senior environment
official had a post, amend or repeal the requirement for the environmental
impact statement.

The Justice Department alleged that in 2002, a Monsanto employee, having
failed to obtain the senior environment official's agreement to amend or
repeal this requirement, authorized and directed the Indonesian consulting
firm to make an illegal payment totaling $50,000 to the senior environment
official to "incentivize" him to agree to do so.

The Monsanto employee also directed representatives of the Indonesian
consulting company to submit false invoices to Monsanto for "consultant
fees" to obtain reimbursement for the bribe, and agreed to pay the
consulting company for taxes that company would owe by reporting income from
the "consultant fees."

In February 2002, an employee of the Indonesian consulting company
delivered $50,000 in cash to the senior environment official, explaining
that Monsanto wanted to do something for him in exchange for repealing the
environmental impact study requirement, the Justice Department alleged.

The senior environment official promised that he would do so at an
appropriate time.

In March 2002, Monsanto, through its Indonesian subsidiary, paid the false
invoices thus reimbursing the consulting company for the $50,000 bribe, as
well as the tax it owed on that income. A false entry for these "consulting
services" was included in Monsanto's books and records.

The senior environment official never authorized the repeal of the
environmental impact study requirement.

Monsanto has also settled related civil enforcement proceedings by the
Securities and Exchange Commission by agreeing to pay a $500,000 civil
penalty.

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