NEW YORK, Dec 15 (AFP) - Time Warner, the world's largest media-entertainment company, said Wednesday it had agreed to pay a total of 510 million dollars to resolve federal probes into accounting irregularities at its America Online (AOL) units.
The company said 210 million dollars would be paid in agreement with the Department of Justice (DoJ), while a further 300-million-dollar penalty would be levied under a proposed settlement with the Securities and Exchange Commission (SEC).
Deputy US Attorney General James Comey said the Justice Department would file a criminal complaint against AOL that charges several employees with securities fraud.
However, the prosecution will be deferred for two years and then dismissed, so long as the company adheres to all stipulations of its deal with the government.
"If AOL fails to comply with the agreement, the deal is off. And they are in a world of trouble," Comey said.
As well as the 210-million-dollar payout, the agreement requires AOL to undertake a wide range of corporate reforms.
The charges levelled against AOL arose out of a scheme to falsify the financial results of a company called Purchase Pro -- a dot-come startup which is now bankrupt.
"As so often happens, during the dot-com bubble days, the revenues that AOL and Purchase Pro were counting on did not materialize, Comey said.
"And instead of confronting that harsh reality, AOL and Purchase Pro cooked up a scheme to inflate Purchase Pro's revenues," he added.
Four former Purchase Pro executives have agreed to plead guilty to felony charges based on their roles in the scheme.
The multi-million dollar settlement incorporates a 60-million-dollar fine and the establishment of a 150-million-dollar fund to settle any related shareholder or securities legislation.
The proposed 300-million-dollar settlement with the SEC would resolve an investigation by the securities watchdog into whether AOL improperly accounted for a 400-million-dollar payment made by German media company Bertelsmann, which used to own 50 percent of AOL Europe.
12/15/2004 21:21 GMT - AFP