Smith & Wesson Probed By DOJ, SEC For Illegal Bribe Payments

By on July 13, 2010

Smith & Wesson (NASDAQ: SWHC), the Massachusetts based, Nevada incorporated gun-maker announced that it was under investigation by the Department of Justice and the Securities and Exchange Commission for potential violations of the Foreign Corrupt Practices Act.  News of Smith & Wesson’s possible involvement in bribe payments first surfaced on January 20, 2010 when the Justice Department unveiled indictments charging 22 executives and employees in the military and law enforcement equipment industry with violations of the Foreign Corrupt Practices Act.

One of the executives indicted was Amaro Goncalves, a Vice President of sales at Smith & Wesson.  The indictments allege that the executives engaged in a scheme to pay bribes to the Minister of Defense for a country in Africa.  FBI agents posed as representatives of a senior government minister of an African country.  The agents proposed a scheme under which executives and employees at several companies would pay 20% “commissions” in order to win business. In response to the DOJ probe, Smith & Wesson said:

“…there could be indictments of our company, our officers, or our employees. In addition, we could be prevented from bidding on domestic military and government contracts, and could risk debarment by the U.S. Department of State.”

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