Schnitzer Steel paying $15.2m over bribes in Asia

Updated: 2006-10-17 09:21
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PORTLAND, Oregon - Schnitzer Steel Industries Inc. has agreed to pay $15.2 million over charges that an Asian subsidiary bribed steel mill managers in China and South Korea, the company said.

The company reached a $7.7 million settlement with the US Securities and Exchange Commission, and pleaded guilty in US District in Portland on Monday to charges that its South Korean subsidiary had violated the Foreign Corrupt Practices Act. It will pay a $7.5 million fine.

The SEC said Schnitzer's South Korean subsidiary, SSI International Far East Ltd., made improper cash payments and gave gifts to managers at government-owned steel mills in China between 1999 and 2004 to encourage business with Schnitzer. The company also paid bribes to privately owned steel mills in both China and South Korea.

The payments were made on behalf of Schnitzer and for Japanese steel companies that Schnitzer was acting as a broker for, according to the federal regulators.

The company said the improper payments, nearly $1.9 million total according to regulators, took place with nearly all of the company's customers in Asia.

"These past payments in Asia were, and are, contrary to the policies and standards of Schnitzer Steel and its subsidiaries," Kenneth M. Novack, chairman of Schnitzer's board, said in a statement.

Schnitzer discovered the improper payments in 2004 and began to investigate internally, the company said. It notified the SEC and the Department of Justice shortly afterward and has worked with the organizations to reach the settlement.

The company also changed its senior management in the company, hiring John Carter as chief executive officer in 2005.

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