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Panasonic Avionics Under U.S. Bribery Probe, WSJ Reports

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April 1 (Bloomberg) -- A Panasonic Corp. unit that makes inflight entertainment and communications systems for airlines is under a bribery investigation by U.S. regulators, the Wall Street Journal reported.

The legal department of Panasonic Avionics, based in Lake Forest, California, told executives and employees to preserve documents that may be relevant to the government investigation, the newspaper said today, citing company documents. Chieko Gyobu, a spokeswoman for the Osaka, Japan-based parent company, declined to comment when reached by phone today.

Employees were asked to preserve documents related to gifts or benefits offered to airline employees or government officials, as well as any that reported rumors, concerns or complaints of alleged bribery or corruption, the report said, citing a Jan. 20 company notice. Panasonic Avionics received a subpoena from government investigators last month, the Journal said, citing a March 25 company notice.

Both notices reference the 1977 Foreign Corrupt Practices Act, which bars U.S. companies and those listed on U.S. stock exchanges from paying bribes to foreign government officials, the report said. Spokespeople for the U.S. Securities and Exchange Commission and the Justice Department, which enforce the act, declined to comment.

The January notice said Panasonic intends to cooperate with the investigation and that the existence of any inquiry doesn’t mean the company broke the law, the newspaper said.

Panasonic fell 3.4 percent to 632 yen in Tokyo trading, compared with a 2.1 percent drop in the Nikkei 225 Stock Average.

Revival Plan

The company’s avionics unit is the “world leader” in inflight entertainment and communications, with the most systems installed and serving the most airlines, according to its website. Panasonic began expanding into avionics in 1979 and was among the first to market video equipment to airlines, it says.

United Continental Holdings Inc., the world’s largest carrier and a customer of Panasonic Avionics’ satellite wireless Internet technology, declined to comment on whether it was involved in the probe, Rahsaan Johnson, a spokesman for the Chicago-based carrier, said in an e-mail.

Other customers including Latam Airlines Group SA, Emirates and Singapore Airlines Ltd. didn’t immediately return calls or e-mails seeking comments.

Record Loss

Panasonic is struggling to recover from a record loss in the year ended March 2012. The company said last week it plans to revive profit at its TV-making unit and boost sales of housing products to meet a target for operating income of 350 billion yen ($3.7 billion) in three years.

The company is targeting growth in business-to-business segments, which include the avionics unit and navigation systems and batteries for cars. Its revival measures also include selling control of its logistics unit and the possible sale of a stake in its health-care division.

Panasonic has forecast a net loss of 765 billion yen for the fiscal year ended March 31, following a 772 billion-yen loss the previous 12 months.

To contact the reporter on this story: Grace Huang in Tokyo at

To contact the editor responsible for this story: Michael Tighe at

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