The U.S. Securities and Exchange Commission has charged San Antonio-based Clear Channel Outdoor Holdings Inc. regarding actions taken by employees at a then-Chinese subsidiary to bribe Chinese government officials to obtain outdoor advertising contracts in violation of the Foreign Corrupt Practices Act.
In a 13-page order issued Thursday, SEC officials announced that Clear Channel and its majority-owned subsidiary in China called Clear Media Limited — a subsidiary it has since sold — had “consented” to the federal agency’s findings that it violated anti-bribery, recordkeeping and internal accounting controls provisions of the Securities Exchange Act of 1934.
Clear Channel agreed to settle the charges by paying the federal agency $26 million — $20.1 million in disgorgement plus prejudgment interest and a $6 million civil penalty — and agreed to stop violating the law, but did so without technically admitting or denying the charges.
The SEC order states that finds that Clear Media bribed Chinese government officials to obtain contracts required to sell advertising services to public and private sector clients for display on public bus shelters and other outdoor displays between 2012 and 2017.
The SEC found that Clear Media used sham intermediaries and false invoices to generate cash for off-book “customer development” consultants engaged to win advertising business from government and private customers. Clear Media’s improper payments were falsely characterized as legitimate entertainment, cleaning and maintenance, and “customer development” expenses in Clear Channel’s consolidated books and records, according to the order.
Clear Channel Outdoor issued the following statement: “As the SEC’s resolution acknowledges, the company cooperated with the SEC throughout its investigation; has since sold its entire interest in Clear Media; and has undertaken a number of actions to enhance and strengthen its compliance policies and procedures and related recordkeeping and internal controls. Resolving these legacy matters is important to the company, which believes this settlement is in the best interests of the company and its shareholders. The company remains deeply committed to promoting a culture of ethical conduct and compliance.”
The SEC’s investigation was conducted by Christine Neal, M. Shahriar Masud, Sonali Singh and Brittany Prelogar of the FCPA Unit. Clear Channel was represented by Anita Bandy, a partner in the Washington, D.C., office of Skadden Arps Slate Meagher & Flom.