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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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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.


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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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A Surprising Snippet From The Recent Opinion Procedure Release


This prior post highlighted the DOJ’s recent FCPA Opinion Procedure Release (only the third FCPA opinion procedure release since 2014).

In the release, sought by a “child welfare agency based in the United States,” the DOJ stated that it did not intend to take any enforcement action based on information provided by the Requestor regarding certain expenses for two government officials from a foreign country traveling to the U.S. to visit with families that have adopted children from the Foreign Country.

While the overall conclusion of the release was hardly surprising, there was a surprising snippet from the release that could have been handled better by the DOJ.

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DOJ Issues FCPA Opinion Procedure Release


The Foreign Corrupt Practices Act when enacted directed the DOJ Attorney General to establish a procedure to provide responses to specific inquiries by those subject to the FCPA concerning conformance of their conduct with the DOJ’s “present enforcement policy.”

Pursuant to the governing regulations of the so-called DOJ Opinion Procedure Release Program, only “specified, prospective—not hypothetical—conduct” is subject to a DOJ opinion.  While the DOJ’s opinion has no precedential value, its opinion that contemplated conduct conforms with the FCPA is entitled to a rebuttable presumption should an FCPA enforcement action be brought as a result of the contemplated conduct.

Earlier this week, the DOJ issued this opinion procedure release (dated August 14, 2023). It is only the third FCPA opinion procedure release since 2014.

The Requestor was a “child welfare agency based in the United States.”

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