The Securities and Exchange Commission reports that a U.S. company has agreed to pay more than $6.5 million to resolve charges that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act. This includes a $2 million civil penalty and $4.5 million in disgorgement and prejudgment interest.
According to the SEC, employees of a wholly-owned subsidiary of the company based in China arranged for Chinese government officials employed by state-owned health care facilities to travel overseas. These visits were ostensibly for the officials to attend conferences, educational events, and health care facilities, but they often engaged in tourism activities instead. Subsidiary staff created false travel itineraries for these trips that they submitted to compliance personnel, and they falsified internal compliance documents that affirmatively denied or omitted mention of the tourism activities.
While these trips were purportedly part of the subsidiary’s marketing and outreach efforts, the SEC states, in fact they were often intended to induce the Chinese officials to purchase the company’s products.
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