Dow Chemical to pay $325,000 to SEC

2/14/07
WASHINGTON

 
Dow Chemical Co. will pay a $325,000 civil penalty to settle charges that a subsidiary made improper payments to Indian government officials who held sway over regulatory approvals for the company's pesticides, the Securities and Exchange Commission said.

 
Dow Chemical, which is based in Midland, Mich., also agreed to cease and desist from future violations of the Foreign Corrupt Practices Act. It settled without admitting or denying wrongdoing, the SEC said late Tuesday.

 
The SEC found that, from 1996 through 2001, Dow Chemical's DE-Nocil Crop Protection Ltd. unit improperly paid an estimated $200,000 to Indian state and federal officials as it sought to register several products slated for marketing in time for India's growing season. The SEC said these payments weren't adequately reflected in Dow Chemical's books and records, and that the company's system of internal controls failed to prevent the payments.

 
The SEC said Dow Chemical conducted an internal investigation and voluntarily presented the results to the SEC, and also disciplined employees. The company also hired an independent auditor to review its books, and expanded training in how to comply with the Foreign Corrupt Practices Act, the SEC said.

 
A Dow Chemical spokesman wasn't immediately available to comment.

 
FROM ANOTHER STORY ON THIS ISSUE

 

"This was a voluntary approach," said Garry Hamlin, a Dow Chemical
spokesman. "We commissioned an internal investigation, then we voluntarily
notified the SEC of what we had found."

He said a number of employees at DE-Nocil had "succumbed to pressure from
Indian officials who were demanding personal payments. Because the employees
knew that this would not be acceptable to us as part-owners, they falsified
books and records to keep us in the dark."


(Updated with comment from spokesman in fifth and sixth paragraphs.)

    By Siobhan Hughes
   Of DOW JONES NEWSWIRES
 
WASHINGTON (Dow Jones)--Dow Chemical Co. (DOW), the big U.S. chemical maker,
will pay a $325,000 civil penalty to settle charges that a subsidiary made
improper payments to Indian government officials who held sway over
regulatory approvals for the company's pesticides, the Securities and
Exchange Commission announced late on Tuesday.

Dow Chemical, based in Midland, Michigan, also agreed to cease and desist
from future violations of the Foreign Corrupt Practices Act. It settled with
the SEC without admitting or denying wrongdoing.

The SEC found that, from 1996 through 2001, Dow Chemical's DE-Nocil Crop
Protection Ltd. unit paid an estimated $200,000 in improper payments and
gifts to Indian state and federal officials as it sought to register several
products slated for marketing in time for India's growing season. The SEC
said these payments weren't adequately reflected in Dow Chemical's books and
records, and that the company's system of internal controls failed to
prevent the payments.

The SEC said Dow Chemical conducted an internal investigation and
voluntarily presented the results to the SEC, and also disciplined
employees. The company also hired an independent auditor to review its
books, and expanded training in how to comply with the Foreign Corrupt
Practices Act, the SEC said.

"This was a voluntary approach," said Garry Hamlin, a Dow Chemical
spokesman. "We commissioned an internal investigation, then we voluntarily
notified the SEC of what we had found."

He said a number of employees at DE-Nocil had "succumbed to pressure from
Indian officials who were demanding personal payments. Because the employees
knew that this would not be acceptable to us as part-owners, they falsified
books and records to keep us in the dark."

Dow Chemical had a 75.5% stake in DE-Nocil as of March 2001, according to
the SEC.

-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654;
Siobhan.Hughes@dowjones.com
 

Source: Dow Jones Newswire

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