Gartner will pay $2.5 million to settle allegations of FCPA violations in South Africa

Gartner agreed to pay almost $2.5 million as part of a settlement with the Securities and Exchange Commission (SEC) regarding suspected FCPA violations in South Africa.

According to the SEC's order, the Connecticut-based technological research and consulting firm will pay a $1.6 million civil penalty, as well as disgorgement and prejudgment interest totaling $856,764 for violating the FCPA's anti-bribery, books and records, and internal accounting controls provisions.

Gartner did neither confirm or deny the SEC's allegations.

The specifics: Gartner "entered into a corrupt arrangement with a private South African company with close ties to South African government officials, knowing or consciously disregarding that all or part of the money paid to the private company would be used to bribe government officials to influence the award of consulting contracts to Gartner," according to the SEC in an administrative proceeding.

The South African Revenue Service (SARS) granted Gartner a $1 million bid in February 2015 to analyse its information technology systems. According to the SEC's decision, the proposal did not reveal the involvement of the unnamed private entity.

According to the SEC, Gartner was awarded a $10 million bid for Phase 2 of the evaluation in July 2015, which again made no mention of the private company's role. Instead, Gartner engaged consultants from the private company to work on the contracts, which a Gartner consulting manager stated was required to qualify for the contracts under South Africa's Black empowerment policy.

“Gartner’s policy regarding the hiring of third-party consultants did not adequately address anti-corruption risks,” the order said. “At the time of the SARS engagement, the company lacked risk-based screening procedures for hiring third-party contractors, had no anti-corruption related vendor onboarding procedures, and lacked adequate monitoring procedures.”

Compliance considerations: Following press reports in South Africa, Gartner self-disclosed the apparent FCPA violations and cooperated with the SEC's investigation by "providing regular updates and sharing facts identified in the course of its own internal investigation, making foreign-based employees available for interviews in the United States, and encouraging cooperation by former employees," according to the order.

To address the shortcomings raised in the order, the company changed and improved relevant policies and procedures, as well as training programmes, as well as expanded due diligence procedures, employed more compliance officers, and boosted financing for its compliance function.

Gartner did not reply quickly to a request for comment.

By fLEXI tEAM