U.S. Probes Panasonic Unit for Alleged Bribery Violationsby
The company says it is in full cooperation with investigation
Panasonic also raises full-year profit and sales forecasts
A Panasonic Corp. inflight entertainment and communications systems subsidiary is under investigation by U.S. authorities for allegedly breaking bribery and securities laws.
Panasonic Avionics Corp. is being probed by the U.S. Department of Justice and Securities and Securities Exchange Commission for violating the Foreign Corrupt Practices Act, the Osaka-based company said in a statement Thursday. Panasonic said it’s cooperating with the agencies, and evaluating the potential financial impact of the probe.
The announcement of the probe mars an otherwise positive earnings release for Panasonic, which raised its full-year profit and revenue forecasts. The subsidiary is part of a corporate division that also makes mobile phones, projectors and surveillance cameras with a total of 33,000 employees. The segment had 751.5 billion yen ($6.7 billion) in sales in the nine months ended Dec. 31, or 14 percent of total revenue.
In a separate release, Panasonic said Chief Executive Officer Paul Margis left Panasonic Avionics and was succeeded by Hideo Nakano, formerly deputy CEO. The company also replaced the chief financial officer of the unit, and appointed a new chief operating officer.
The avionics company, founded in 1979, is among the top suppliers of seat-back entertainment systems for airline passengers, and also makes communications systems including Wi-Fi access in planes. It’s based in Lake Forest, California, and has more than 4,500 employees.
The Wall Street Journal reported in April 2013 that the unit was under a bribery investigation. 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 newspaper said, citing company documents.
Panasonic, the parent company, increased its net income outlook 8.3 percent to 130 billion yen for the period ending March 31, citing weakening yen. Operating income will total 265 billion yen on 7.35 trillion yen in sales, it said.
Panasonic’s shares closed 1.4 percent lower at 1,169 yen in Tokyo before the announcement. The stock was little changed in German trading.