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Economy

Goodyear to pay Sh1.4bn fine for bribes to Kenyan officials

A worker removes a tyre during production at a
A worker removes a tyre during production at a Goodyear factory in Indonesia. Treadsetters has been accused of paying Sh135 million in bribes to help sell Goodyear tyres. PHOTO | FILE |  REUTERS

American tyre company Goodyear will pay more than $16 million (Sh1.4 billion) to settle civil charges alleging its subsidiaries paid bribes to win business in Kenya and Angola, US regulators have said.

The Securities and Exchange Commission said that Goodyear Tire & Rubber Company failed to prevent or detect more than $3.2 million (Sh288 million) in bribes in a four-year period. Goodyear neither admitted nor denied the charges.

The SEC said the company cooperated throughout the investigation and self-reported the violations. In a statement released to the press, the SEC said it had charged Goodyear with violating the Foreign Corrupt Practices Act over bribes paid to land tyre sales.

Bribes in Kenya totalled $1.5 million (Sh135 million) and were allegedly paid through the company’s subsidiary Treadsetters Tyres Ltd between 2007 and 2011.

“Bribes were generally paid in cash to employees of private companies or government-owned entities as well as other local authorities such as police or city council officials,” the court documents read. “The improper payments were falsely recorded as legitimate business expenses in the books and records of the subsidiaries, which were consolidated into Goodyear’s books and records.”

The SEC’s order found that Treadsetters Tyres bribed employees of the Kenya Ports Authority, the Armed Forces Canteen Organisation, Nzoia Sugar Company, the Kenya Air Force, Ministry of Roads, Ministry of State for Defence, the East African Portland Cement Company and Telkom Kenya.

Another Sh1.3 million ($14,457) is alleged to have been paid to local government officials including city council employees, police and building inspectors.

“Treadsetters’ general manager and finance director were at the centre of the scheme,” SEC officials say in their filings, which do not include the names of the accused individuals. “They approved payments for phony promotional products and then directed the finance assistant to write-out the checks to cash. Treadsetters’ staff then cashed the checks and used the money to make improper payments to employees of customers.”

Investigators believe the practice existed from before Goodyear’s initial 2002 acquisition of a minority stake in Treadsetters.

“By 2006, Goodyear had acquired a majority ownership interest in the company, though the day-to-day operations of Treadsetters continued to be run by Treadsetters’ founders and the local general manager. During the relevant time period, Treadsetters had annual revenues of approximately $20 million (Sh1.8 billion).”

Goodyear’s subsidiary in Angola bribed employees of the Catoca Diamond Mine, which is owned by a consortium of mining interests including Angola’s national mining company Endiama EP and Russian mining company ALROSA. Others bribed in Angola worked at UNICARGAS, Engevia Construction and Public Works, Electric Company of Luanda, National Service of Alfadega and Sonangol.

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