Clear Channel agrees to pay $26M in bribery settlement
A subsidiary of San Antoniobased billboard company Clear Channel Outdoor Holdings Inc. will pay about $26 million to settle allegations that it provided gift cards, golf clubs, vases and other expensive gifts to Chinese government officials to obtain outdoor advertising contracts.
Clear Channel on Thursday agreed to the payment — $16.4 million related to the benefits it received from the alleged improper payments, almost $3.8 million in interest and a $6 million penalty — under a settlement with the Securities and Exchange Commission.
The company submitted a settlement offer to the SEC to resolve allegations that it violated the Foreign Corrupt Practices Act without admitting to or denying the commission’s findings. The law generally makes it illegal for people or companies to make payments to foreign government officials to assist in obtaining or retaining business.
The SEC found that from at least 2012 through 2017, the company’s majority-owned Chinese subsidiary — Clear Media Ltd. — bribed Chinese government officials to obtain concession contracts required to sell advertising services to public and private sector clients for display on bus shelters, street furniture and billboards.
In addition, the SEC said in a cease-and-desist order that Clear Media used sham intermediaries and false invoices to generate cash for off-the-book consultants to win advertising business from government and private customers.
Clear Channel failed to ensure that sufficient internal accounting controls were in place, the SEC said.
“Resolving these legacy matters is important to the Compa
ny, which believes this settlement is in the best interests of the Company and its shareholders,” Clear Channel said in a statement. “The Company remains deeply committed to promoting a culture of ethical conduct and compliance.”
At the time of the alleged wrongdoing, a subsidiary of San Antonio-based iheartmedia Inc. owned the majority of Clear Channel’s outstanding shares. In 2019, Clear Channel separated from iheartmedia as part of the latter’s Chapter 11 bankruptcy case. Clear Channel became a stand-alone, publicly traded company.
Clear Channel held a majority of Clear Media’s shares from 2005 through early 2020, when it sold the subsidiary for $253 million.
The SEC said Clear Media’s principal executive officer from 2012 to 2019, identified as “Executive A,” spent “hundreds of thousands of dollars, subject to no advance review or approval, on government officials for first-class travel, hotel rooms, meals, and entertainment.”
Clear Media failed to identify the officials who received the benefits or the amounts spent on their behalf, the SEC said. The commission added that in one instance in 2015, Clear Media employees were cautioned by local management not to “describe the purpose of the Hospitality Cost too specifically … for the purpose of winning the contract.”
Clear Media also provided improper benefits to government officials through “cleaning and maintenance” vendors,” the SEC said.
From 2012 to 2017, Clear Channel’s internal auditors “repeatedly reported elevated bribery risks at Clear Media,” but the SEC said the parent company failed to ensure that the subsidiary sufficiently addressed the concerns.
Clear Media also blocked those auditors from accessing financial records, the SEC said.
The SEC said it considered Clear Channel’s cooperation and remedial efforts in determining whether to accept the settlement offer. The company promptly shared facts from its own investigation and produced relevant documents, the SEC said, and the company disposed of its interest in Clear Media and enhanced its anti-corruption compliance policies and internal accounting controls.