Financial Services/Private Equity
Greenville, South Carolina, United States
Nationality of Foreign Officials: Mexico
Summary of Allegations:
WAC de Mexico S.A. de C.V. (“WAC Mexico”), WAC’s previous subsidiary in Mexico which was sold in July 2018, operated a line of business Prestamos Viva (“Viva”) providing small loans to Mexican state and federal employees. It entered into at least 30 Viva contracts with the government, with loans collected by the union before sending it to WAC Mexico.
Between 2010 and 2017, WAC Mexico had bribed Mexican government officials with US$4.1 million to ensure timely repayments of the loans ongoing. WAC Mexico noted the bribes as royalty payments, scholarship, or support. The bribes were paid via cash, deposit to bank accounts of the officials or their relatives or friends, directly or by third parties.
WAC Mexico maintained accounting records that disguised the nature of the bribes, caused WAC to unjustly profited US$18 million, and mischaracterize the illicit payments as legitimate business fees.
WAC Mexico sent WAC headquarter spreadsheets falsely recording the bribes as commissions, and the WAC accounting department accepted the record without requesting invoice or backup support.
In 2013, WAC Mexico started to maintain an FCPA policy without implementing relevant monitor, control, and training. WAC failed to exercise sufficient control over WAC Mexico or ensure WAC Mexico’s adherence to the FCPA policy.
Since 2014, WAC Mexco’s then-senior vice president approved relevant payments to the government officials, with an authorization limit increased by WAC.
In 2015, the then-CEO of WAC terminated the internal audit VP who voiced compliance concerns including issues of accounting controls at WAC Mexico, caused to eliminate staff, and nominated the then-general counsel with sparse related experience as the head of internal audit and compliance.
Approximate Alleged Payments to Foreign Officials: US$4.1 million
Business Advantage Allegedly Obtained: Obtain and retain loan business relating to the state and federal government employees with US$18 million profit.
Agencies: Internal Investigation
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
The company began an internal investigation in March 2017.
Agencies: United States: Department of Justice
Results: Declination
Year Resolved: 2020
Compliance Monitor:
Ongoing: No
Details:
The company voluntarily contacted both the U.S. Department of Justice and the U.S. Securities and Exchange Commission to inform them that it was conducting an internal investigation and would cooperate with the agencies if they elected to open investigations.
On 7 August 2019, the company further disclosed in its Form 10-Q that the FCPA internal investigation focuses on its business dealings in Mexico between 2010 and 2017 in particular loans made to local government officials.
On 6 August 2020, the DOJ declined to prosecute WAC regarding its FCPA violations in Mexico, based on factors including WAC’s voluntary self-disclosure, full remediation, the FCPA settlement with the SEC, and relevant facts and nature of the offense.
Agencies: United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Civil Penalty
Year Resolved: 2020
Compliance Monitor:
Ongoing: No
Details:
On 7 August 2019, the company disclosed in its Form 10-Q that the FCPA internal investigation focuses on its business dealings in Mexico between 2010 and 2017 in particular loans made to local government officials. The SEC is conducting a formal investigation.
On 6 August 2020, WAC reached a settlement with the SEC to resolve charges under the anti-bribery, books and records, and internal controls provisions of the FCPA.
Under the terms of the cease-and-desist order, WAC will pay a total of approximately US$21.726 million, including disgorgement of US$17.826 million, prejudgment interest of US$1.9 million, and a civil penalty of US$2 million.
Discovery Method: Whistleblower
Details:
An anonymous letter was sent to World Acceptance Corporation's independent public accounting firm about compliance matters.
Country: