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A U.S. company has agreed to pay total penalties of more than $122 million to resolve charges that it violated the Foreign Corrupt Practices Act by providing corrupt payments and benefits to Chinese government officials for the purpose of obtaining, retaining, and increasing business in China. The company will pay a criminal penalty of more than $55 million to the Department of Justice and approximately $67 million in disgorgement and pre-judgment interest to the Securities and Exchange Commission.
According to the DOJ, the company admitted that between 2007 and 2016 it knowingly and willfully conspired with others in a scheme to falsify its books and records and provide corrupt payments and benefits to Chinese government officials. These payments allowed the company to (1) obtain and retain direct selling licenses for its wholly-owned subsidiaries in China, (2) improperly influence Chinese governmental investigations into the company’s compliance with Chinese laws, and (3) improperly influence Chinese state-owned and state-controlled media for the purpose of removing negative media reports about the company.
The DOJ states that the company failed to timely disclose the conduct that triggered the investigation; the nature and seriousness of the offense, which spanned approximately a decade and involved high-level employees; and the lack of an effective compliance program at the time of the misconduct. On the other hand, the company engaged in remedial measures such as terminating and disciplining the individuals who orchestrated the misconduct, adopting heightened controls and anticorruption protocols, and significantly increasing the resources devoted to compliance. In addition, the company’s full cooperation with the government’s investigation resulted in a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range for the final criminal penalty amount.
September 25, 2020 // Trade Report