There Have Been 29 FCPA Enforcement Actions Regarding Alleged Improper Travel And Entertainment Of Chinese “Foreign Officials”

August 31, 2023

Approximately 15 years ago, while in private practice, I was involved in an internal investigation involving the Chinese subsidiary of a U.S. issuer providing travel and entrainment to individuals who the DOJ/SEC considered Chinese “foreign officials.”

It culminated in the 2007 FCPA enforcement action against Lucent Technologies in which the SEC alleged that the company violated the FCPA’s books and records and internal controls provisions based on its Chinese subsidiary arranging for non-business travel for “employees of Chinese state-owned or state-controlled telecommunications enterprises, to travel to the United States and elsewhere.” According to the SEC, “the majority of the trips were ostensibly designed to allow the Chinese foreign officials to inspect Lucent’s factories and to train the officials in using Lucent equipment” however “during many of these trips, the officials spent little or no time in the United States visiting Lucent’s facilities” but rather visited various tourist destinations.

At the time, it was one of the first “pure” FCPA travel and entertainment type of enforcement actions.

As highlighted here, last week the SEC announced an FCPA enforcement action against 3M and it was – in many respects – a virtual carbon copy of the Lucent enforcement action from 2007.

As highlighted in this post the basic fact pattern of the Lucent and 3M enforcement actions has played out in numerous FCPA enforcement actions over the last approximate 15 years.

By my count, there have been 29 FCPA enforcement actions concerning travel and entertainment of alleged Chinese “foreign officials” (in whole or in part).

This is truly an astonishing figure as it involves just one type of FCPA enforcement action involving just one country. (Note: there have been numerous other travel and entertainment enforcement actions involving alleged “foreign officials” from other countries – see here and here for instance).

Similar to the recent 3M enforcement action, many of the travel and entertainment enforcement actions involving alleged Chinese “foreign officials” involve subsidiary employees concealing, falsifying, hiding, etc. information from corporate headquarters and use of a complicit Chinese travel agency as a third party.

Set forth below, in chronological order, are the 29 FCPA enforcement actions concerning travel and entertainment of alleged Chinese “foreign officials.”