A Deep Dive into Clear Channel's SEC FCPA Settlement

Corruption Crime & Compliance

Clear Channel, a San Antonio based advertising company, is settling with the SEC for $26 million, for bribery violations committed by its former Chinese subsidiary, Clear Media. In this episode of Corruption, Crime and Compliance, Michael Volkov explores the details of this case, from covert cash funds to internal audit challenges, shedding light on the issues that led to this notable settlement.

You’ll hear him discuss:

• The charges stemmed from bribery violations committed by Clear Channel’s former Chinese subsidiary, Clear Media. The bribes included expensive gifts, entertainment and travel, given to influence contract renewal negotiations with Chinese government officials.
• Clear Media engaged in deceptive practices, falsely documenting payments to cleaning and maintenance companies to fund illegal payments. They cautioned employees to omit gift recipients and disguised payments through oral agreements. False invoices and tax records were created to justify cash payments to shell company intermediaries that provided no actual services.
• Internal audits from 2012 to 2017 highlighted deficiencies, red flags, and indicators of bribery. Despite this, Clear Channel failed to pursue aggressive remedial actions.
• Internal auditors faced resistance from Clear Media and even reported false information provided by them. The lack of diligence and follow-up allowed the issues to persist.
• Clear Channel, however, cooperated extensively with the investigation. They promptly shared facts, produced relevant documents, and facilitated interviews with current and former employees.
• Remediation efforts included disposing of Clear Media, enhancing anti-corruption compliance policies, and increasing resources for compliance.
• The settlement serves as a cautionary tale, emphasizing the importance of robust internal audits and proactive remediation.

KEY QUOTES:

“Clear Channel received credit for its cooperation and remediation. Its cooperation included promptly sharing facts, proactively producing relevant documents, producing in real time documentation of audits of Clear Media's internal controls during the course of the investigation...” - Michael Volkov

“So from 2012 to 2017, Clear Channel auditors regularly cited Clear Media's deficiencies, red flags, indicators of bribery, and inadequate internal controls. The auditors cited numerous remedial measures, but Clear Channel failed to ensure that appropriate remedial steps were taken.” - Michael Vokov

“But given the level of resistance and the failure of the internal audit function to operate properly and to follow up specifically on the issues that they were uncovering, the resolution has to be viewed in a positive light and was only counterbalanced by the fact that what Clear Channel did was cooperate and provide extensive remediation and ultimately sold its Chinese subsidiary...” - Michael Volkov

Resources

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group