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Hitachi made improper payments to South Africa's ANC

By AFP
South Africa The US Securities and Exchange Commission charged Hitachi over alleged corrupt payments made to South Africa's ruling ANC party linked to a 2 billion power plant deal.  By Yoshikazu Tsuno AFPFile
SEP 28, 2015 LISTEN
The US Securities and Exchange Commission charged Hitachi over alleged corrupt payments made to South Africa's ruling ANC party linked to a $2 billion power plant deal. By Yoshikazu Tsuno (AFP/File)

Washington (AFP) - The US Securities and Exchange Commission charged Hitachi on Monday over alleged corrupt payments made to South Africa's ruling ANC party linked to a $2 billion power plant deal.

The SEC said the Japanese company made "improper payments" linked to the deal that were "inaccurately recorded" under the US Foreign Corrupt Practices Act (FCPA).

Without admitting or denying the allegations, Hitachi agreed to pay $19 million to settle the case.

The charges related to the company's late-2000s sale of a 25 percent stake in a South African subsidiary to a front company of the African National Congress, as Hitachi was competing for a deal to build two large power plants.

The deal, which became a large scandal in South Africa in 2010, "gave the front company and the ANC the ability to share in the profits from any power station contracts that Hitachi secured."

Hitachi won the projects, and paid the front company $5 million in dividends on the project profits. It also paid the company a $1 million "success fee" that it recorded as a consulting fee.

Under FCPA rules, US regulators can pursue such charges against a foreign company like Hitachi which has a US presence.

"Hitachi's lax internal control environment enabled its subsidiary to pay millions of dollars to a politically connected front company for the ANC to win contracts with the South African government," said SEC enforcement division direction Andrew Ceresney.

"Hitachi then unlawfully mischaracterized those payments in its books and records as consulting fees and other legitimate payments."

Under public pressure, in 2014 Hitachi bought back the 25 percent stake in its subsidiary from the ANC.

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