Lifecore Resolves FCPA Enforcement Action Regarding Wastewater Issues In Mexico
Yesterday, the DOJ released this so-called “declination with disgorgement” letter regarding Lifecore Biomedical, Inc. (f/k/a Landec Corporation) in connection with alleged Foreign Corrupt Practices Act violations involving wastewater issues in Mexico.
Pursuant to the letter agreement, Lifecore agreed to “disgorge” $406,505 in “costs avoided” (which of course is an interesting spin on disgorgement which is traditionally understood to mean relinquishment of unjust gains).
The letter agreement states in full:
Issues To Consider From The 3M Enforcement Action
This recent post highlighted the $6.5 million enforcement action against 3M based on findings that the company was duped by certain China subsidiary employees.
This recent post discussed how the type of conduct at issue in the 3M enforcement action would seem to fit squarely within prior SEC policy for when an enforcement action would not be warranted.
This post highlights additional issues to consider from the enforcement action.
Timeline
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.”
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.”
The Largest FCPA Enforcement Actions Involving Healthcare Related Companies
In large part due to the expansive FCPA enforcement theory that physicians, lab personnel and others associated with most foreign healthcare systems are “foreign officials” under the FCPA (first brought to the FCPA context in 2002 – see here for the prior post), healthcare related companies have resolved numerous FCPA enforcement actions.
This post highlights the twenty largest FCPA enforcement actions (as measured by settlement amount) involving healthcare related companies (broadly speaking pharmaceutical, medical device, life sciences, and diagnostic companies as well as those selling health related products).
As indicated by the below list, the top three enforcement actions involve foreign companies.