Westport settles with US Securities and Exchange Commission over Chinese bribery case

2 October 2019

Westport Fuel Systems, headquartered in Vancouver, Canada, and Nancy Gougarty who served as Westport COO/CEO have reached a settlement with the United States Securities and Exchange Commission (SEC) resolving the SEC’s investigation into the company’s compliance with the US Foreign Corrupt Practices Act (FCPA) in relation to an alleged bribery case in China.

Under the settlement, Westport agreed to pay total sanctions of $4,046,000 (a civil penalty to the SEC of $1,500,000, prejudgment interest of $196,000, and $2,350,000 representing the disgorgement of proceeds related to the subject transaction), and Gougarty agreed to pay a civil penalty of $120,000. Westport also agreed to self-report to the SEC on the status of its enhanced anti-corruption compliance policies for a term of two years. The SEC ordered Westport and Gougarty to cease and desist violations of the relevant provisions of the FCPA.

The 2013-2016 case is related to Wesport’s Chinese joint venture, Weichai Westport Inc. (WWI), which was jointly owned at the time by Westport’s Hong Kong subsidiary Westport Innovations (Hong Kong) Limited, a Chinese state-owned entity Weichai Holding Group Co. (Weichai)—who was the largest shareholder—and a privately held Hong Kong conglomerate.

According to the documents in this case, from 2013 through 2016, Westport, through Gougarty and others, engaged in a scheme to bribe a Chinese government official who held a senior position at Weichai, to obtain business and a cash dividend payment from WWI. At the request of Weichai, Westport transfered a portion of WWI’s shares at a low valuation to a Chinese private equity fund in which the Chinese government official held a financial interest. In exchange, the Chinese government official would use his influence to cause WWI to authorize an increased dividend payment of $3.5 million to Westport and to execute a supply agreement between the joint venture and Westport.

Westport and Nancy Gougarty made no admission or denial of the SEC’s findings under the settlement. The SEC noted Westport’s cooperation and remediation in this case.

Nancy Gougarty joined Westport in July 2013 as the company’s Chief Operating Officer. In July 2016, she became the Chief Executive Officer and a member of Westport’s board of directors until she retired in January 2019.

Source: US SEC | Westport