The Deere case is an important reminder for companies to devote proper attention to ensuring robust integration planning for acquired companies.  DOJ has provided important guidance on acquisition practices and the need to integrate acquired companies into the acquiring company’s ethics and compliance program and internal controls. 

Deere made little effort to integrate Wirtgen into its ethics and compliance program and control environment.  As a result, Wirtgen’s illegal activities in Thailand continued without any supervision or detection. 

In reading through the relevant facts, Wirtgen engaged in pervasive bribery schemes to entertain and provide sightseeing trips to government officials to secure valuable contracts.  Much of the entertainment centered on massage parlor visits. 

Massage Parlor Entertainment

From 2017 through 2020, Wirtgen regularly entertained foreign officials from RTAF, DOH, and DRR at several massage parlors in Thailand. Many of these massage parlor entertainment expenses, which were submitted for approval by Wirtgen’s Managing Director and his sales team, contained round number denominations and lacked any specific justifications.

In several instances, the names of Wirtgen employees were added to expense receipts to disguise the fact that government officials were the beneficiries.  These expenses reports were then routinely approved by Wirtgen’s Managing Director for Southeast Asia or its Managing Director in Thailand.

Some of the visits to the massage parlor from November 2019 through March 2020 occurred coincided with Royal Thai Air Force conduct of tenders in which Wirtgen participated. One attendee at massage parlor visits in December 2019, and again in March 2020, was a high level RTAF officer in charge of drafting and awarding the tenders. Other expense reports, submitted and approved in November 2019 and February 2020, reflect massage parlor services provided to another high-ranking officer of the RTAF. Wirtgen Thailand was awarded two RTAF tenders in March and April 2020 for approximately $665,000

Similarly, Wirtgen Thailand incurred massage parlor expenses from at least 2017 through 2019, to host representatives from DOH tender committees, including a March 9, 2017, expense for “Department of Highway – Group of 15 persons from DOH Committee…” Another expense report submitted for approval in July 2018, noted only “entertainment” of DOH.

Wirtgen Thailand’s Managing Director arranged massage parlor visits for DOH officials in order to improperly influence the outcome of an upcoming DOH tender. The Managing Director noted in August 2018, “Finally, we have 1^st succeed to step in this tender since 3 years tried to add qualification to the DOH tender.” The “DOH Team” was again taken to a massage parlor by the Wirtgen Thailand Managing Director in September 2018 and December 2018, and the subsequent expense reports noted only “entertainment” in round numbers. Wirtgen Thailand won multiple tenders from DOH during this time period, including a December 2018 tender for $2,303,294, an October 2019 tender for $498,567, and a November 2019, tender for $1,451,432.

Wirtgen Thailand also provided improper benefits at massage parlors to officials of the Department of Rural Roads in December 2019 in order to influence the award of tenders. Wirtgen Thailand was subsequently awarded a tender by the DRR in April 2020, for $1,283,905. Two of the four DRR signatories on that tender were recipients of entertainment by Wirtgen at a December 2019 massage parlor visit.

In total, Wirtgen paid approximately $58,000 in expenses for entertainment of government officials at massage parlors.  None of these expenses followed proper approval processes for such interactions, and all were improperly booked as legitimate business expenses.

Sightseeing Trip Disguised as “Factory Visit”

In October 2019, Wirtgen Thailand paid for four foreign officials from the Department of Highways, including a member of the DOH procurement committee, and two of their spouses, to travel to its facilities in Germany. This “factory visit” was allegedly for the purpose of learning more about the company’s equipment. However, the itinerary for this trip indicated that no factory visit took place. Instead, the trip solely consisted of sightseeing in Switzerland, including travel to Interlaken, Zermatt, and Lake Lucerne, as well  as shopping and touring in the Alps, with stays in luxury hotels at each stop. Deere spent approximately $47,500 entertaining DOH officials on this sightseeing spree to win lucrative tenders.

During the trip, which lasted for eight days, Wirtgen submitted a bid on a DOH tender. On October 16, 2019, just after the sightseeing trip ended, Wirtgen was awarded that tender, valued at approximately $498,567. Wirtgen was then awarded a second tender worth $1,451,432 one month later, on November 20, 2019.

During this period, Wirtgen ignored Deere policies governing visits by non-U.S. government officials to its factories and facilities which required the provision of extensive information to support an application for approval.

Cash Payments by Third-Party Agent

From 2018 to 2020, Wirtgen made direct cash payments through a third-party agent to bribe government officials at DOH, DRR, and RTAF to obtain business.

For instance, in April 2019, Wirtgen’s Managing Director texted the company’s Finance Manager “re DOH … will have candy money for you too, next week…. Re DRR I will have to discuss it again.” With respect to these cash bribes, the Managing Director instructed the Finance Manager to “Liaise with DOH…. Prepare 5 envelopes. And withdraw cash. You may take THB 100,000 first. For use on the delivery date.” The Finance Manager subsequently asked, “For the five envelopes should I go ahead and put [THB] 20,000 in each?” to which the Managing Director replied that he would do it himself.

In addition to directly paying cash bribes, Wirtgen used a third-party consultant to assist in paying bribes to government officials at DOH and DRR in order to secure four lucrative tenders for machine sales worth approximately $4.67 million. For each tender, Wirtgen entered into a sham commission agreement with the third-party consultant, which provided no legitimate services and was simply a conduit for paying bribes to the Thai government officials. The sham commission agreements authorized payments of approximately $285,129 and were signed by the Managing Director. Wirtgen Thailand’s Finance Manager also signed the sham commission agreement related to the DRR tender.

Communications between Wirtgen Thailand’s Managing Director and its Finance Manager refer to a series of bribe payments made by the third-party consultant on Wirtgen’s behalf to numerous government officials, including cash bribes to the new director of DOH, the former director of DOH, and a set of golf clubs given to the deputy director of DRR. All of these improper payments were made in connection with a 2020 DRR tender.

Wirtgen Thailand’s commission agreement with the third-party consultant in connection with the DRR tender contained bank account information on where to direct the commission payment. The account holder was a senior official of DOH who, along with his wife, had also gone on the nine-day sightseeing and “factory visit” trip to Germany, Prague and Austria in October 2019, and this same official was entertained in December 2018 at a massage parlor as described above.

In 2018, this same third-party consultant was used to facilitate the sale of machinery outside of the tender process to SKT, an organization that operated as a dealer in the sale to DOH. Wirtgen Thailand paid the third-party approximately $46,205 and obtained the sale of 10 units of pneumatic tire rollers for approximately $924,104.

Between 2018 through 2020, as a result of bribes made through the third-party consultant, Wirtgen Thailand obtained illicit profits of approximately $2.7 million on sales of machinery to SKT, DOH and DRR.

Commercial Bribery of Customer A

During this same time period, Wirtgen Thailand engaged in commercial bribery of Customer A by employing a similar scheme to secure sales of large industrial machines, which required the subsequent purchase of spare parts to keep them operational. The bribes occurred in 2018 and 2019, and included improper gift and entertainment expenses, extravagant sightseeing vacations under the guise of “factory visit” trips and making cash payments disguised as “brokerage fees” to Customer A employees involved in procurement. Wirtgen Thailand benefited from Customer A’s purchases of spare parts required to service machines purchased as a result of the bribe scheme through 2023.As a result of these bribes paid through cash, gifts, entertainment, and travel, Wirtgen Thailand made profits of approximately $1.5 million on $5.3 million in gross sales of machines and spare parts to Customer A from 2018 to 2023.