A Netherlands-based multinational company will pay more than $62 million to resolve charges that it violated the Foreign Corrupt Practices Act with respect to conduct related to sales in China. This amount includes $15 million in civil penalties and more than $47 million in disgorgement and prejudgment interest.
According to the Securities and Exchange Commission, the company’s subsidiaries in China used special price discounts with distributors that created a risk that excessive distributor margins could be used to fund improper payments to government employees. In addition, employees, distributors, or sub-dealers of those subsidiaries in China engaged in improper conduct by (1) influencing officials to draft technical specifications in public tenders to favor the company’s products and (2) preparing additional bids with other manufacturers’ products to create the appearance of legitimate public tenders and to meet the minimum bids requirement under Chinese public tender laws.
Charles Cain, chief of the SEC Enforcement Division’s FCPA Unit, noted that “despite remediation done in connection with its prior violations” (for which it was charged in 2013), the company “nevertheless failed over the course of several years to implement sufficient internal accounting controls,” which led to the alleged violations in this case.
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