Three Chinese-Owned Auto Parts Firms to Pay $21.6 Million After Compliance Misstep

Key takeaways

• Settlement Amount: BWI North America Inc., BWI Indiana Inc., and BWI Chassis Dynamics (NA) Inc. will pay $21,660,983 to resolve False Claims Act allegations.
• Alleged Violations: The companies were accused of misrepresenting their eligibility for Paycheck Protection Program (PPP) loans by exceeding SBA size limits and being majority-owned by Chinese state-owned enterprises.
• Compliance Failures: Missteps included inaccurate certifications, disregarding program exclusions for government-owned entities, and not properly accounting for global affiliates in eligibility calculations.
• Cooperation Credit: The companies received credit for disclosing facts, identifying individuals involved, and sharing results from their internal investigation.
• Whistleblower Award: GNGH2 Inc., the qui tam relator, will receive over $2.16 million from the settlement.

Deep Dive

When Congress rolled out the Paycheck Protection Program in the early, chaotic days of the pandemic, the intent was simple: get cash to struggling American businesses fast enough to keep people on payrolls. What it wasn’t designed for was multinational auto parts suppliers backed by the government of the People’s Republic of China.

Yet, according to the U.S. Department of Justice, that’s exactly what happened. Three U.S.-based subsidiaries of a Chinese state-owned manufacturer (BWI North America Inc., BWI Indiana, and BWI Chassis Dynamics) secured PPP loans they weren’t supposed to have. Together, they’ll now pay more than $21.6 million to settle allegations they violated the False Claims Act by misrepresenting their eligibility.

The BWI Entities are no small garage shop. They’re part of a global operation supplying brake and suspension systems to carmakers around the world. At the time of their PPP applications, they were majority-owned and controlled by Beijing’s State-Owned Assets Supervision and Administration Commission, and, according to U.S. authorities, that alone should have disqualified them. The companies were also affiliated with other entities in China, Europe, and elsewhere, meaning their combined workforce exceeded the Small Business Administration’s size limits for the industry.

Still, they certified their eligibility. Loans were approved. And, years later, the government came knocking.

To their credit, officials say the companies didn’t dig in for a fight. They turned over documents, named those involved, and shared the findings of their own internal investigation. That cooperation earned them credit under DOJ guidelines and helped shape the settlement terms.

“This settlement demonstrates that businesses and individuals who abuse government programs like the Paycheck Protection Program will be held accountable,” said Acting U.S. Attorney Richard G. Frohling for the Eastern District of Wisconsin. SBA General Counsel Wendell Davis put it more bluntly: the agency is committed to “rooting out every dollar of PPP fraud.”

The case began with a whistleblower complaint filed by GNGH2., which will walk away with over $2.16 million for bringing the allegations forward under the False Claims Act’s qui tam provisions.

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