Scoular to Pay Over $10 Million to Resolve FCPA Bribery Case

Key Takeaways

• Bribery Scheme: The Scoular Company will pay more than $10 million and enter a three-year deferred prosecution agreement after admitting to a conspiracy to violate the Foreign Corrupt Practices Act through a years-long bribery scheme involving Mexican border officials.
• Border Payments Disguised as Fees: Between 2013 and 2019, Scoular authorized customs brokers to pay more than $400,000 in bribes, which were disguised as reinspection fees, allowing the company to avoid more than $6.5 million in fees and related costs.
• Cartel Connection: Although prosecutors said Scoular did not know it at the time, part of the bribery payments ultimately benefited individuals associated with a cartel operating along the U.S.-Mexico border, adding a national security dimension to the case.
• Compliance Remediation: Scoular received cooperation credit for its internal investigation and extensive remediation, including strengthening its anti-corruption program, enhancing third-party oversight, improving financial controls, and expanding employee training, resulting in a 25% reduction from the bottom of the sentencing guidelines range.

Deep Dive

What appeared on the books as re-inspection fees was, prosecutors say, something else entirely. Over six years, The Scoular Company allegedly reimbursed customs brokers for hundreds of thousands of dollars in bribes paid to Mexican border officials, a scheme that has now resulted in a resolution worth more than $10 million with the U.S. Department of Justice.

The Omaha-based agricultural supply chain company entered into a three-year deferred prosecution agreement after being charged with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act. The case stems from conduct between 2013 and 2019, when Scoular relied on customs brokers to move shipments of corn and other agricultural products across the U.S.-Mexico border.

Under Mexican law, those shipments were subject to inspections for dirt, soil, and other impurities. According to court documents, when inspections threatened to delay shipments or trigger additional costs, Scoular employees authorized customs brokers to pay Mexican officials to ensure the trains continued into the country. The brokers allegedly paid approximately $2,000 in bribes for each Scoular train before billing the company for what were described as rei-nspection fees.

Scoular reimbursed those invoices, while employees discussed shipments and the payments through WhatsApp and other communication channels, prosecutors said. The Justice Department alleges the company authorized more than $400,000 in bribes and, in doing so, avoided more than $6.5 million in fees and related costs.

One aspect of the case emerged only after investigators traced where some of the money ultimately ended up. According to the Justice Department, neither Scoular nor its employees knew that a portion of the bribery payments benefited individuals associated with the operations of a cartel active along the U.S.-Mexico border. Prosecutors cited that finding as one of the factors supporting the resolution, arguing that corruption in cross-border trade can carry consequences that extend well beyond the immediate transaction.

Under the agreement, Scoular will pay a criminal penalty of $9,769,521 and forfeit an additional $414,351. The company also agreed to continue cooperating with any ongoing or future criminal investigations during the three-year term of the deferred prosecution agreement and to maintain and strengthen a compliance and ethics program designed to prevent violations of the Foreign Corrupt Practices Act and other anti-corruption laws.

The Justice Department declined to award the company credit under its Corporate Enforcement and Voluntary Self-Disclosure Policy because Scoular did not voluntarily and timely disclose the misconduct. It did, however, receive cooperation credit after conducting an internal investigation, providing evidence and factual presentations to prosecutors, identifying individuals involved in the misconduct, producing documents requested by the department, and securing counsel for current employees.

Prosecutors also credited Scoular for overhauling its compliance program. The company strengthened oversight by senior leadership, restructured its compliance function, discontinued the use of customs brokers associated with the reinspection fee process in Mexico, enhanced third-party due diligence and contractual controls, strengthened financial controls over higher-risk transactions, revised its Code of Conduct and anti-corruption policies, and expanded anti-corruption training across the business. Those efforts contributed to a criminal penalty set 25% below the bottom of the applicable U.S. Sentencing Guidelines range.

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