FCPA: I (Heart) Bribery - Clear Channel Settles Charges

Clear Channel Outdoor Holdings Inc. has reached an agreement with the Securities and Exchange Commission (SEC) following concerns regarding the Foreign Corrupt Practices Act (FCPA). The U.S.-based out-of-home advertising firm will pay over $26 million in relation to the settlement. The concerns arose from interactions with Chinese government officials in the pursuit of outdoor advertising contracts.

The SEC's investigation identified connections between Clear Channel and its agent, Clear Media Limited, which was, at the time, a majority-owned subsidiary in China. The SEC's order notes that Clear Media, from 2012 to 2017, interacted with Chinese officials in the process of seeking contracts essential for their advertising services. These services were targeted at both public and private entities and were to be displayed in places like bus shelters.

The report further states that Clear Media utilized intermediaries and invoices, which subsequently resulted in cash generation for "customer development" consultants. The intention was to acquire advertising business contracts from a range of clients, both governmental and private. The SEC's findings indicate that these payments were listed in Clear Channel's records as expenses categorized under entertainment, cleaning and maintenance, and "customer development".

Charles Cain, who oversees the SEC Enforcement Division’s FCPA Unit, commented on the findings, stating, “The order sheds light on Clear Media's interactions with Chinese officials and their use of consultants in the pursuit of contracts.” He also mentioned Clear Channel’s response, noting that, “The company was made aware of these concerns by their internal auditors and has now addressed them.”

In response to the SEC's order, Clear Channel has taken steps to align with the stipulations of the Securities Exchange Act of 1934 concerning anti-bribery, recordkeeping, and internal accounting controls provisions. They have agreed to the conditions set out, which include a payment of approximately $20.1 million covering disgorgement and prejudgment interest, in addition to a $6 million civil penalty.

[SEC Order]  [SEC Press Release]