Ball, an Indiana corporation based in Colorado that manufactures metal packaging for household goods, food and beverages, and provides aerospace and technological services, resolved an enforcement action in which the SEC alleged it violated the FCPA’s books and records and internal controls provisions. 


  • The SEC alleged Ball, through a subsidiary, Formametal, S.A., acquired in March 2006, paid bribes totaling at least $106,749 to employees of the Argentine government to secure the importation of prohibited used machinery and the exportation of raw materials at reduced tariffs.  The SEC alleged some of the payments and compliance failures occurred prior to Ball’s acquisition and Ball failed to take adequate steps to ensure such activities did not recur at Ball-controlled Formametal.  Soon after Ball acquired Formametal two (then) senior executives at the subsidiary authorized improper payments to Argentine officials.  These payments and others were mischaracterized in Formametal’s books and records as “customs assistance,” “customs advisory services,” “verification charge[s],” “fees,” or “advice fees for temporary merchandise exported” and went undetected for more than a year.  Even after being detected and re-classified, some improper payments were still inaccurately recorded as ordinary business “interest” or “miscellaneous” expenses in the books and records. 
  • Ball violated the FCPA’s internal controls provision by failing to devise and maintain an effective system of internal controls.  Such internal controls violations continued even after senior Ball officers were notified in mid-2006 that Formametal’s employees had made questionable payments and caused other compliance issues.  Inadequate internal controls allowed, for example, equipment to be imported into Argentina without appropriate documentation and made it difficult to detect that Formametal paid bribes to facilitate the imports.  Another internal controls failure occurred when key personnel responsible for dealing with customs officials remained at Formametal even though due diligence suggested Formametal may have previously authorized questionable customs payments and Ball’s executives were made aware of such issues as a result of the diligence.   


  • Without admitting or denying the SEC’s allegations, Ball consented to the entry of a cease-and-desist order prohibiting Ball from further violations of the FCPA’s books and records and internal controls provisions.  To resolve the action, Ball agreed to pay a civil penalty of $300,000. 
  • In February 2010 Ball reported the DOJ had closed its FCPA investigation and declined to file charges. 


  • The cease-and-desist order specifically stated the SEC would not impose a civil penalty in excess of the $300,000 – a relatively modest penalty in today’s FCPA enforcement environment – based on Ball’s cooperation with the SEC in its investigation and enforcement action. 
  • The Ball enforcement action once again demonstrates the need to conduct adequate due diligence on potential acquisition targets and to remedy deficiencies encountered post-acquisition. 
  • Finally, the Ball matter also demonstrates the need to conduct effective due diligence on third parties (e.g., customs agents) and to document accurately and transparently the services being provided and monies being paid in the books and records and ensure controls are in place to catch any lapses in the documentation and recordation.