SEC Charges Clear Channel Outdoor with FCPA Violations Relating to China Subsidiary
The Securities and Exchange Commission today announced that Clear Channel Outdoor Holdings Inc. agreed to pay more than $26 million to resolve charges that it bribed Chinese government officials to obtain outdoor advertising contracts in violation of the Foreign Corrupt Practices Act (FCPA).
The SEC’s order finds that Clear Channel, a U.S. based company in the out-of-home advertising industry, violated the FCPA in connection with the actions of its agent, Clear Media Limited, which, at the relevant time, was a Clear Channel majority-owned subsidiary in China. Specifically, the order finds that, from at least 2012 through 2017, 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. In addition, the order finds 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. According to the order, 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. The order further finds that, from at least 2012 through 2019, Clear Channel failed to ensure that sufficient internal accounting controls were in place at Clear Media.
“As the SEC’s order finds, Clear Media bribed Chinese officials with expensive gifts and entertainment and used off-book consultants to obtain contracts from Chinese authorities,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit. “Despite repeated red flags raised by its internal auditors, Clear Channel failed to address the deficient internal accounting controls that allowed Clear Media to continue these improper payments for many years.”
Clear Channel consented to the SEC’s order finding that it violated anti-bribery, recordkeeping, and internal accounting controls provisions of the Securities Exchange Act of 1934. Without admitting or denying the findings, Clear Channel has agreed to cease and desist from committing or causing any future violations of these provisions, pay disgorgement plus prejudgment interest totaling approximately $20.1 million, and pay a $6 million civil penalty.
The SEC's investigation was conducted by Christine Neal, M. Shahriar Masud, Sonali Singh, and Brittany Prelogar of the FCPA Unit.