[Fortunately, Diebold does not work in areas that are important, just
consumer banking systems and electronic voting machines.]
http://www.bradblog.com/?p=10323
The BRAD BLOG : Diebold Charged With Bribery, Falsifying Docs,
'Worldwide Pattern of Criminal Conduct'
By Brad Friedman on 10/23/2013, 4:20pm PT
One of the world's largest ATM manufacturers and, formerly, one of the
largest manufacturers of electronic voting systems, has been indicted by
federal prosecutors for bribery and falsification of documents.
The charges represent only the latest in a long series of criminal
and/or unethical misconduct by Diebold, Inc. and their executives over
the past decade.
According to Cleveland's Plain Dealer, a U.S. Attorney says the latest
charges are in response to "a worldwide pattern of criminal conduct" by
the company....
Federal prosecutors Tuesday filed charges against Diebold Inc., accusing
the North Canton-based ATM and business machine manufacturer of bribing
government officials and falsifying documents in China, Indonesia and
Russia to obtain and retain contracts to provide ATMs to banks in those
countries.
The two-count criminal information and deferred prosecution agreement
calls for Diebold to pay nearly $50 million in penalties: $23 million to
the U.S. Securities and Exchange Commission, and $25 million to the
Department of Justice.
The agreement with federal prosecutors also calls for the implementation
of rigorous internal controls that includes a compliance monitor for at
least 18 months. The government agreed to defer criminal prosecution for
three years, and drop the charges if Diebold abides by the terms of the
agreement.
Despite at least $1.75 million in bribes said to have been paid the
company around the globe, nobody will go to jail for what U.S. Attorney
Steven Dettelbach describes as their "worldwide pattern of criminal
conduct," because they are a corporation --- and you are not.
The $50 million the company has agreed to pay is a mere fraction of the
firm's $3 billion in annual revenues. That, even though Diebold is a
repeat offender --- which may be describing it mildly...
In 2010 the company settled an SEC fraud suit for $25 million. They also
admitted in 2008 that they had overstated 2007 election division revenue
by some 300% in hopes of manipulating stock prices.
As earlier as 2004, thanks to documents leaked by a whistleblower, it
was discovered that Diebold had illegally used uncertified certified
hardware and software in California election systems and planned to lie
about it to state investigators. The e-voting systems, repeatedly found
over the years to be easily hacked, were decertified for use by the
state at the time (though they are still used widely around much of the
country today.)
Still, nobody went to prison for any of Diebold's crimes.
Their most notorious infamy was tied to their often bumbling work as the
nation's second largest e-voting company, which produced wildly insecure
and often inaccurate voting systems and tabulators and which they proved
willing to lie about. The Ohio-based firm first attracted the notice,
and ire, of Democrats in 2003 when its then CEO, Walden O'Dell, penned a
fundraising letter on behalf of George W. Bush and the Republican Party,
promising that he was "committed to helping Ohio deliver its electoral
votes to the president next year."
O'Dell, who many had blamed for Diebold's flagging stock prices and the
sullying of the company's otherwise-excellent 150-year old reputation,
was eventually forced to resign for "personal reasons" in late 2005. He
was later required to pay back some $470,000 as part of the SEC's 2010
lawsuit after it had been found that Diebold had "manipulated the
company's accounting to meet earnings forecasts from 2002 through 2007."
In 2007, Diebold, Inc., after nearly two years of attempting to sell off
their elections division, renamed that portion of their business to
Premier Election Solutions. Eventually, Premier, the second largest
voting machine company in the country at the time, was sold to ES&S, the
nation's largest. In turn, the U.S. Dept. of Justice forced ES&S to sell
off many of the assets from the Diebold/Premier acquisition in response
to anti-trust concerns. Those assets were eventually purchased by the
Canadian firm, Dominion Voting which has since become the second largest
voting machine company in the U.S. after their subsequent purchase of
Sequoia Voting, a firm tied for years to the late Venezuelan President
Hugo Chavez.
Diebold's Chief Financial Officer and Executive Vice President, Kevin
Krakora, stepped down in 2009 amidst the SEC's investigation at the
time. As The BRAD BLOG reported exclusively in 2007, Krakora had been
the top beneficiary of an apparent round of insider trading by a number
of Diebold executives who unloaded hundreds of thousands of dollars
worth of company stock just before the announcement of the
Diebold/Premier name change, and the subsequent plummeting of the parent
company's stock price. In a mass sell-off, Krakora and other executives
sold their shares at more than $53/share, a near-historic high, just
prior to the price plunging more than 50% on the announcement of the
elections division spin-off. Diebold, Inc.'s price has never recovered
from the 2007 sell-off. It closed at less than $30/share on Wednesday.
The Plain Dealer reports that court documents filed this week by the
U.S. Justice Department allege executive and company employees from
Diebold's Asia Pacific region paid "$1.75 million in bribes, gifts and
trips to dozens of employees of banks in China and Indonesia"...
The bribes were paid in order to secure and retain business with bank
customers, including state-owned and state-controlled banks.
Diebold attempted to disguise the payments and benefits in various ways,
including by making payments through third parties designated by the
banks, and by inaccurately recording leisure trips for bank employees as
"training."
The court documents also accuse Diebold employees, over a four-year
period, of creating and entering into false contracts with a distributor
in Russia for services that the distributor was not performing. The
distributor, in turn, used the Diebold funds to pay bribes to employees
of Diebold's privately-owned bank customers in Russia in order to obtain
and retain ATM-related contracts with those customers.
Despite their years-long global crime spree, it seems Diebold will
receive yet another slap on the wrist, and another polite request to
please not to do that again. You and I should be so lucky next time we
run into repeated trouble with the law. Good luck with that.
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