Annual Report 2010 (PDF, 5.2MB) - Panalpina Annual Report 2012

Annual Financial Statements 2010
General legal reserves
149
The legal reserve must be at least 20% of the share capital of Panalpina World Transport (Holding) Ltd. in order to comply with the SCO.
Panalpina World Transport (Holding) Ltd. has met the legal requirements for legal reserves under art. 671 SCO.
Guarantees
in thousand CHF 2010 2009
Guarantees in favor of third parties
Guarantees and indemnity liabilities, SCO, art. 663b para 1 199,076 136,002
Additionally, Panalpina World Transport (Holding) Ltd., Basel, has issued letters of awareness in favor of various banks concerning liabilities
due from subsidiaries amounting to CHF 0.2 million (previous year: CHF 0.2 million).
Contingent liabilities
In 2008, Panalpina World Transport (Holding) Ltd. has signed a letter of indemnity as a security for the intraday cash pool overdraft limits over
a maximum amount of CHF 60 million.
Panalpina World Transport (Holding) Ltd. carries joint liability to the federal tax authorities for value-added tax of all Swiss subsidiaries.
Pending legal claims
Business practices investigation
In November 2010, Panalpina entered into a Deferred Prosecution Agreement (DPA) with the US Department of Justice (DOJ) to resolve
claims against it arising from an investigation by the DOJ and the US Securities and Exchange Commission (SEC) for violations of the US
Foreign Corrupt Practices Act (FCPA). Under the DPA, the DOJ has agreed to defer any criminal prosecution for three years. Panalpina has
accepted certain obligations under the DPA, such as continuing to improve its compliance policies and procedures and providing regular
reports to the DOJ on the company’s progress. If Panalpina satisfies its obligations under the DPA, the DOJ has agreed to release the
company from criminal liability at the end of the three-year term.
As part of the settlement of the case, Panalpina’s US subsidiary, Panalpina Inc., has agreed to enter a guilty plea to charges related
to the violation of the accounting provisions of the FCPA, and to pay a fine of USD 70.6 million in four instalments. Panalpina, Inc. also
consented to a final judgment in a civil action brought by the SEC to disgorge USD 11.3 million in profits. These payments and the cost
of the related compliance consultancy forms part of a provision that was reserved in the reporting year.
Freight forwarding antitrust investigation
In October 2007, Panalpina’s headquarters in Switzerland and the USA were raided by the respective competition authorities. Further, a
request for information was served by the New Zealand Commerce Division and a document retention notice by the Competition Bureau
Canada. In April 2008, the Australian Competition and Consumer Commission served a notice on the Australian subsidiary requesting
information and documents and in June 2008, Panalpina’s UK subsidiary was the recipient of a request for information issued by the
European Commission requesting certain information and records relating to alleged antitrust violations in the freight forwarding industry. In
August 2010, Brazilian authorities announced preliminary investigations against the freight forwarding industry.
These activities were part of a coordinated investigation of several competition authorities against various major freight forwarding companies
for alleged anti-competitive behaviour.
Furthermore, a civil class action lawsuit was filed in the USA against Panalpina and a number of its major competitors as a direct consequence
of these investigations alleging a conspiracy in the pricing of freight forwarding services. In July 2009, plaintiffs filed an amended
complaint adding additional defendants and claims. In November 2009, the Company, along with other defendants, filed motions to
dismiss the amended complaint for failure to state a claim and for lack of subject matter jurisdiction. Oppositions to the motions were
filed in January 2010. At this stage, Panalpina is unable to express an opinion as to the probable outcome of this litigation and thus to estimate
the potential loss, if any.
In 2009, the Competition Bureau Canada closed its investigation into alleged anti-competitive activity due to a lack of evidence substantiating
an undue lessening of competition.
In January 2010, the Australian Competition and Consumer Commission also discontinued its investigation.
In February 2010, Panalpina was served with a Statement of Objections by the European Commission, alleging anti-competitive behaviour
in the freight forwarding industry. In an oral hearing before the Commission’s case team held in July 2010, Panalpina has presented its
arguments. In January 2011, Panalpina received an additional request for information issued by the European Commission. A final decision
is not expected prior to mid-2011.
Panalpina Annual Report 2010