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


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.

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Duped By Certain China Subsidiary Employees, 3M Resolves A $6.5 Million Enforcement Action


The SEC announced today that 3M resolved a $6.5 million Foreign Corrupt Practices Act enforcement.

The basics are as follows.

Approximately 6-10 years ago, a former Marketing Manager of a 3M China-based subsidiary “secretly” provided “tourism activities” for Chinese health care officials.

The Marketing Manager “would create a travel itinerary that included various legitimate business, training and marketing activities for submission to 3M-China’s compliance personnel for approval,” however there were “alternate itineraries” that “consisted of various tourism activities at or near the location of the educational events.”

There is no suggestion that anyone at 3M headquarters knew of or approved of the conduct. Indeed, subsidiary employees, among other things, “falsified internal compliance documents that affirmatively denied and/or omitted mention of the Tourism Activities that were planned as part of the overseas trip.”

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Philips Joins The Corporate FCPA Repeat Offender Club


The Foreign Corrupt Practices Act corporate repeat offender club is getting so large, that it really is not all that exclusive.

In 2013, Koninklijke Philips Electronics N.V. (“Philips”), a Netherlands-based company with shares listed on the New York Stock Exchange, resolved a $4.5 million FCPA enforcement action concerning conduct in Poland. (See here for the prior post).

In resolving the matter, Philips consented to entry of the Order prohibiting future FCPA violations.

Yesterday, the SEC announced that Philips agreed to pay “more than $62 million to resolve charges that it violated the FCPA” with respect to conduct related to its sales of medical diagnostic equipment in China.”

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The “Golden Share”


An interesting recent article in the Wall Street Journal discusses how various levels of the Chinese government are taking stakes in private companies.

According to the article: “the government stakes are sometimes very small [sometimes a 1% holding] but they tend to give the government board seats, voting power and sway over business decisions. Colloquially, they are known as golden shares.”

The article states:

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Bankman-Fried Charged With FCPA Offense


In December 2022, the Department of Justice announced criminal charges against Samuel Bankman-Fried arising from an “alleged wide-ranging scheme by [him] to misappropriate billions of dollars of customer funds deposited with FTX, the international cryptocurrency exchange [he] founded …, and mislead investors and lenders to FTX and to Alameda Research, the cryptocurrency hedge fund [he] also founded.”

Specifically, Bankman-Friend was charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.

Yesterday, the DOJ filed a superseding indictment adding a Foreign Corrupt Practices Act conspiracy charge to the criminal charges Bankman-Fried is facing.

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