The World Acceptance Corporation (WAC) has agreed to pay $21.7 million to resolve claims that its former subsidiary, WAC de Mexico S.A. de C.V., paid bribes to officials for over seven years, a violation of the Foreign Corrupt Practices Act. WAC, a consumer loan company from South Carolina, allegedly paid bribes to Mexican Union and Government officials to ensure that its personal loans would be paid in full and on time, a violation of the FCPA’s anti-bribery provision. The Securities and Exchange Commission (SEC) claims that WAC Mexico intentionally kept inaccurate records and failed to run effective internal auditing or compliance systems from 2010 to 2017. WAC allegedly paid the bribes either by depositing money into official’s bank accounts or by an intermediary for the company delivering and distributing cash between the officials. The bribes were then written off in WAC Mexico’s accounting books as business expenses.
In 2017, WAC notified the SEC that it had received an anonymous letter exposing the non-compliant activity of WAC Mexico. WAC almost immediately hired external investigators and auditors to go over its books. After the investigation, WAC set aside more than $20 million that it expected to pay in fines to settle the SEC’s claims. In 2018, WAC fired the CEO of WAC Mexico and started to sever ties. WAC has also received credit from the SEC for assisting in the investigation by helping witnesses to travel to the U.S. for interviews.
The SEC does not disclose whether or not it receives assistance from whistleblowers in prosecuting or settling claims. The whistleblower who sent the anonymous letter to WAC took a risk reporting non-compliance to the company instead of the government. Although WAC promptly took measures to achieve compliance when it received the letter, other companies in this situation often try to retaliate against the whistleblower and hide the evidence. Although the Department of Justice says it has found evidence of bribery in this case, it has decided not to prosecute, partly because WAC cooperated with the SEC’s investigation.
Read the Wall Street Journal’s article here.
Read the SEC’s press release here.