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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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What Congress Intended The Third-Party Payment Provisions To Capture As Well As Not Capture


Call me old-fashioned, but sometimes it is prudent to take a step back and ponder what Congress actually intended to capture, and not capture, by enacting the Foreign Corrupt Practices Act.

Indeed, a common thread in most FCPA judicial decisions is judges consulting the legislative history in interpreting the FCPA.

Most FCPA enforcement actions concern, in whole or in part, the conduct of various third parties.

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Survey Says ….

Survey Results

Recently, White & Case and KPMG released the results of a “2023 Global Compliance Risk Benchmarking Survey” based on “opinions of 201 senior decision-makers from more than 30 countries.”

It is interesting to view several survey responses through the lens of what the DOJ and SEC want companies to do.

For instance, a meaningful percentage of organizations: have never conducted a risk assessment; do not have a written policy regarding engagement with and interaction with third parties; do not require third parties to complete anti-corruption training; do not conduct due diligence of third parties; or do not conduct audits on third parties to assess compliance with anti-corruption requirements.

None of these tasks of course are specifically required by the Foreign Corrupt Practices Act (or other related laws). However, failure to do these tasks have all been alleged in various FCPA enforcement actions most often as an alleged internal control deficiency.

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Gartner Resolves $2.5 Million Enforcement Action


Late last Friday afternoon on a holiday weekend, the SEC released one of the more pedestrian FCPA enforcement actions of recent memory.

The action involved Gartner Inc. (a technological research and consulting company) concerning conduct in 2014 and 2015 in South Africa.

To resolve the matter, Gartner agreed to pay approximately $2.5 million (856,764 in disgorgement and prejudgment interest and a $1.6 million civil penalty).

In summary fashion, this administrative order states:

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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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