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Company to Pay $2.4 Million for Bribery of Chinese Government Officials

Thursday, December 18, 2014
Sandler, Travis & Rosenberg Trade Report

The Securities and Exchange Commission announced Dec. 15 that a Massachusetts-based global manufacturer of scientific instruments has agreed to pay a total of $2.4 million to settle charges that it violated the Foreign Corrupt Practices Act by providing non-business related travel and improper payments to Chinese government officials in an effort to win business. This includes $1.7 million in disgorgement, $310,117 in prejudgment interest and a $375,000 penalty. The SEC notes that this amount reflects that the company self-reported its misconduct, provided extensive cooperation during the investigation, and has taken significant remedial steps to revise its compliance program and enhance internal controls.

According to an agency press release, an SEC investigation found that the company lacked sufficient internal controls to prevent and detect approximately $230,000 in improper payments out of its China-based offices that were falsely recorded in books and records as legitimate business and marketing expenses. These payments included more than $111,000 under 12 collaboration agreements contingent on state-owned entities providing research on the company’s products or using them in demonstration laboratories. The other improper payments involved reimbursements to Chinese government officials, who were often responsible for authorizing the purchase of the company’s products, for leisure trips that typically followed business-related travel.

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