US authorities investigating Panasonic unit over bribery allegations
01 April 2013
A unit of Japanese electronics giant Panasonic is under investigation by US authorities for allegedly paying overseas bribes to secure business contracts.
According to a report in the The Wall Street Journal, Panasonic Avionics, a subsidiary that makes in-flight entertainment and communications systems for airlines, has been served a subpoena for communications between company executives, consultants, and others, company documents reviewed by the Journal reveal.
A 20 January notice instructed recipients to preserve documents "concerning any benefits or gifts provided, or the payment of anything of value, by Panasonic or PAC to any airline employee or government officials."
There was nothing in the company retention documents reviewed by the paper to suggest that the Lake Forest, California-based subsidiary was under investigation. The report said, documents related to the probe referred to the 1977 Foreign Corrupt Practices Act, which prohibited US companies listed on US stock exchanges from paying bribes to foreign government officials.
The law is enforced by the US Department of Justice and the Securities and Exchange Commission.
The probe comes with the Japanese company facing serious financial challenges. In November, Panasonic announced 10,000 jobs cuts by the end of March, only months after it laid off 36,000 employees in the previous fiscal year.
The company struggling to recover from a record loss in the year ended March 2012 (See: Panasonic to book $9.6 billion loss), said last week it planned 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 looking to grow its business-to-business segments, including the avionics unit and navigation systems and batteries for cars. Included in the revival measures is selling control of its logistics unit and the possible sale of a stake in its health-care division.
For the year ended 31 March, the company has forecast a net loss of 765 billion yen, following a 772 billion-yen loss in the previous 12 months.