Hitachi Pays $19M Over Political Payments

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Antoinette Gartrell

Sept. 28 — Multinational electronic manufacturer Hitachi, Ltd., without admitting or denying wrongdoing, agreed to pay $19 million to resolve Securities and Exchange Commission allegations it inaccurately recorded improper payments to South Africa’s ruling political party, in violation of the Foreign Corrupt Practices Act.

Allegedly, Hitachi sold a 25-percent interest in a South African subsidiary to Chancellor House Holdings (Pty) Ltd., a company that served as a front for the African National Congress. Hitachi then encouraged Chancellor to use its political influence to help obtain government contracts from a public utility owned and operated by the South African government, the SEC said in its Sept. 28 release.

Political Payments

Under the arrangement, Chancellor and the ANC were able to share in the profits from any power station contracts that Hitachi secured, the SEC said.

The agency alleged that Hitachi paid Chancellor approximately $5 million in “dividends” based on profits derived from two contracts to build power stations in South Africa. Separately, Hitachi also paid Chancellor an additional $1 million in “success fees” for using its influence during a tender process and then inaccurately booked them as consulting fees, the SEC said.

The commission alleged that Hitachi’s misconduct violated the books and records and internal accounting controls provisions of the federal securities laws.

“Hitachi’s lax internal control environment enabled its subsidiary to pay millions of dollars to a politically-connected front company for the ANC to win contracts with the South African government,” SEC enforcement director Andrew J. Ceresney said in the release. “Hitachi then unlawfully mischaracterized those payments in its books and records as consulting fees and other legitimate payments.”


In addition to paying a $19 million civil penalty, Hitachi also agreed to be permanently enjoined from similar future violations.

Hitachi was represented by Linda Chatman Thomsen of Davis Polk, New York and Washington.

To contact the reporter on this story: Antoinette Gartrell in Washington at

To contact the editor responsible for this story: Phyllis Diamond at

To see the complaint, visit:

To see the proposed final judgment, visit:


Request Securities & Capital Markets on Bloomberg Law