Panalpina has agreed to pay total of some $81.9 million in final resolution of claims arising from the US government’s investigation of violations of the Foreign Corrupt Practices Act.
The forwarder has agreed to plead guilty to violations of the accounting provisions fo the FCPA and pay a fine of $76m. It has also agreed to pay $11.3m in settlement of a civil action.
Under a deferred prosecution agreement, the US Department of Justice has agreed to defer any prosecution of Panalpina World Transport (Holding) Ltd for three years. Panalpina will have to show it has improved its compliance procedures at the end of that period to be released from any criminal liability.
All of the agreements are subject to court approval.
Panalpina’s chief executive Monika Ribar said: “The settlement of these claims marks the closing of an extremely burdensome chapter in Panalpina’s history and the end of a very demanding three-year effort to address and eliminate serious concerns. Now it is time for us to look to the future and to build on the strong and sustainable compliance culture we have put in place.”
Panalpina has decided to appoint an outside compliance consultant to ensure that it meets its compliance and reporting obligations under its deferred prosecution agreement. The cost of the compliance consultancy forms part of the company’s compliance provision of CHF 128 million.
Panalpina said its internal investigation included comprehensive investigations in nine countries and a focused review of transactions and operations in an additional 36 countries. “In addition, Panalpina’s compliance department undertook comprehensive and systematic risk assessments in 33 countries, most of which are high-risk emerging markets. These assessments included a review of third-party relationships, the result of which has been that PWT has terminated relationships with third parties which did not meet the company’s high compliance standards. PWT also closed operations in three countries, including Nigeria, where compliance risks were too pervasive.”
* Panalpina saw a 27 per cent year-on-year increase in air freight for the first nine months of 2010 while ocean freight was up 16 per cent.
Net revenue from forwarding services rose 22 per cent to CHF 5.36 billion (£3.4bn) for the first nine months while adjusted EBITDA was up 84 per cent to CHF128m (£85.6m).
Monika Ribar said: “Our targets for 2010 are well on track for full achievement in 2010.”
In the fourth quarter 2010, Ribar is expecting a deceleration of volume growth rates and does not see a peak season shaping up as it has in the past. The peak season for air freight will only be moderate and in ocean freight, the peak season is already over with restocking having taken place early as businesses attempted to avoid shortages and anticipated peak season rates.
The company is forecasting market growth of at least 15 per cent in air freight and ten per cent in ocean freight in 2010.