TOKYO • A Panasonic in-flight entertainment and communications systems subsidiary is under investigation by the United States authorities for allegedly breaking bribery and securities laws.
Panasonic Avionics Corp is being probed by the US Department of Justice and the Securities Exchange Commission for violating the Foreign Corrupt Practices Act, Panasonic said in a statement yesterday. It said it was cooperating with the agencies and evaluating the potential financial impact of the probe.
The announcement of the probe marred an otherwise positive earnings release for Panasonic, which raised its full-year profit and revenue forecasts.
The subsidiary is part of a corporate division that also makes mobile phones, projectors and surveillance cameras. The segment had 751.5 billion yen (S$9.4 billion) in sales in the nine months ended Dec 31, or 14 per cent of total revenue.
In a separate release, Panasonic said chief executive officer Paul Margis had left Panasonic Avionics and was succeeded by Mr Hideo Nakano, formerly the deputy CEO. The company also replaced the unit's chief financial officer and appointed a new chief operating officer.
The avionics company, founded in 1979, is among the top suppliers of seat-back entertainment systems for airline passengers. It also makes communications systems, including Wi-Fi systems in planes.
Based in Lake Forest, California, it has more than 4,500 employees.
The Wall Street Journal reported in April 2013 that the unit was under a bribery investigation.
Employees were asked to preserve documents related to gifts or benefits offered to airline employees or government officials, as well as any that reported rumours, concerns or complaints of alleged bribery or corruption, the newspaper said, citing company documents.
Parent company Panasonic increased its net income outlook by 8.3 per cent to 130 billion yen for the period ending March 31, citing a weakening yen. Operating income will total 265 billion yen on 7.35 trillion yen in sales, it said.
Panasonic's shares closed 1.4 per cent lower at 1,169 yen in Tokyo, before the announcement. The stock was little changed in German trading.