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  • Former Guinean Mining Minister Convicted on Bribery and Money Laundering Charges

    A former Guinean mining minister was found guilty earlier this week on bribery and money laundering charges following a seven-day jury trial in Manhattan federal court. He was charged with receiving and laundering $8.5 million in bribes allegedly for securing mining rights for two Chinese companies. 

    The conviction came one day after the former minister took the stand in his own defense and admitted to lying to banks about his status as a government official, as well as failing to report the payments on his IRS tax return.

    The conviction also follows other notable enforcement actions involving the mining industry in the Republic of Guinea. Earlier this year, the SEC charged former Och-Ziff executives with bribing government officials across Africa to secure mining deals, including in Guinea.

    SEC Guinea Africa China Och-Ziff Bribery Anti-Money Laundering

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  • Former CEO of Chinese Subsidiary Acquired by Harris Corp. Settles FCPA Offenses Following Proactive Investigation and Disclosure of Conduct by Acquiring Company

    On September 13, Jun Ping Zhang (Ping), the former Chairman and CEO of a subsidiary of Harris Corporation, a Florida-based provider of information technology services to government and commercial markets, agreed to pay a civil penalty of $46,000 to settle the SEC’s allegations that Ping violated the anti-bribery, books and records, and internal controls provisions of the FCPA.  The matter was resolved by an administrative cease and desist order and Ping did not admit or deny the SEC’s findings.

    The allegations relate to actions taken in 2011 and 2012 by Ping, a U.S. resident and citizen, and various unnamed sales staff of Harris Corp.’s wholly-owned subsidiary, Hunan CareFx Information Technology, LLC (CareFx China).  Ping and the sales staff were alleged to have provided illegal gifts to Chinese government officials to obtain and retain business with various state-owned hospitals and regional Departments of Health. The settlement did not allege personal enrichment and contained no order of disgorgement.

    The investigation giving rise to the allegations was spawned in fall 2012 when Harris Corp., notified the SEC and DOJ that it had identified potential violations of the FCPA during a post-acquisition audit of CareFx Corporation, which it had acquired in April 2011.  With the assistance of outside counsel, Harris Corp. conducted an internal investigation into the conduct of CareFx China, a Chinese legal entity and wholly-owned subsidiary of CareFx, which began selling electronic medical records software to state-owned hospitals and regional Departments of Health in late 2009.  The allegations contained within the administrative order depict an ongoing scheme in which CareFx China sales staff under Ping’s management and with his knowledge submitted bogus expenses for cash reimbursement and then used that cash to pay for improper gifts to government officials for the purposes of influencing their decisions to purchase CareFx China’s products and services.

    According to the SEC, from April 2011 to April 2012, Ping “directly authorized or indirectly allowed between $200,000 and $1,000,000 in improper gifts to government officials,” after which CareFx China was awarded over $9,600,000 in contracts with state-owned entities.  As CareFx China’s books and records were consolidated into Harris Corp.’s financial statements following the CareFx acquisition in April 2011, Ping, who had responsibility for reviewing CareFx China’s monthly expense report summaries, knew that the improperly recorded expenses and illegal activity would not be properly disclosed to Harris Corp., nor were they disclosed in the pre-acquisition due diligence.

    According to a September 4, 2012 Wall Street Journal blog post, Harris Corp., concurrent with its internal investigation and timely self-disclosure in 2012, took remedial actions in relation to CareFx China, including making changes to internal control procedures, ending its gift-giving practice, providing additional compliance training, and terminating certain employees.  Shortly thereafter, according to the SEC order, Harris Corp. sold all of CareFx China’s “outward facing operations” and, in mid-2015, Harris Corp. terminated all employees in CareFx China and no longer maintains China-based business operations.

    SEC FCPA Update Corporate Compliance Program China Bribery FCPA SEC

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  • DOJ Declines FCPA Charges Against AstraZeneca Following SEC Settlement

    In conjunction with the SEC’s recent settlement AstraZeneca, the U.K.-based pharmaceutical company announced on August 30 that the DOJ has closed its parallel foreign bribery investigation.  As detailed here, the SEC settled charges against Astrazeneca for allegedly improper payments made by the company’s wholly owned subsidiaries in China and Russia. Under the SEC settlement, the company agreed to disgorge $4.325 million and pay a $375,000 civil penalty with $822,000 in prejudgment interest.  As reported by Reuters, the company issued a public statement stating it was “pleased to have resolution of these matters.”

    DOJ SEC China FCPA Enforcement Action Russia UK AstraZeneca

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  • Novartis AG Settles with SEC Regarding FCPA Offenses in China

    The SEC announced on March 23, 2016 that it settled FCPA allegations with Switzerland-based pharmaceutical company Novartis AG, via a cease and desist order finding that Novartis violated the FCPA’s book and records and internal controls provisions related to activities in China.  The SEC found that employees of two Novartis Chinese subsidiaries gave money and gifts to Chinese health care providers at state-owned hospitals in order to boost sales. In some cases, the order found, Novartis employees created spreadsheets that linked payments to individual Chinese health care providers to increased sales of certain drugs and created a ranking system for the health care providers.

    SEC’s order found that Novartis recorded the payments as lecture fees, conferences, seminars, medical studies, and travel and entertainment.  The SEC further found that Novartis failed to devise and implement a sufficient system of internal accounting controls to detect the improper payments, and lacked an effective anti-corruption compliance program. The order did not say whether Novartis self-disclosed the involved conduct, but the order notes the company's cooperation and states that the company began an internal investigation after news reports surfaced that a competitor was investigating similar FCPA concerns in its Chinese subsidiaries.

    Novartis consented to the SEC’s order without admitting or denying the charges and agreed to pay $25 million to resolve the case, including a $2 million penalty, disgorgement of $21.5 million in profits, and $1.5 million in prejudgment interest.  Novartis will also provide status reports to the SEC for the next two years regarding remediation efforts and new anti-corruption compliance measures.

    SEC China Switzerland Novartis Pharmaceutical

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  • Novartis AG Settles with SEC Regarding FCPA Offenses in China

    The SEC announced on March 23, 2016 that it settled FCPA allegations with Switzerland-based pharmaceutical company Novartis AG, via a cease and desist order finding that Novartis violated the FCPA’s book and records and internal controls provisions related to activities in China.  The SEC found that employees of two Novartis Chinese subsidiaries gave money and gifts to Chinese health care providers at state-owned hospitals in order to boost sales. In some cases, the order found, Novartis employees created spreadsheets that linked payments to individual Chinese health care providers to increased sales of certain drugs and created a ranking system for the health care providers. SEC’s order found that Novartis recorded the payments as lecture fees, conferences, seminars, medical studies, and travel and entertainment.  The SEC further found that Novartis failed to devise and implement a sufficient system of internal accounting controls to detect the improper payments, and lacked an effective anti-corruption compliance program. The order did not say whether Novartis self-disclosed the involved conduct, but the order notes the company's cooperation and states that the company began an internal investigation after news reports surfaced that a competitor was investigating similar FCPA concerns in its Chinese subsidiaries. Novartis consented to the SEC’s order without admitting or denying the charges and agreed to pay $25 million to resolve the case, including a $2 million penalty, disgorgement of $21.5 million in profits, and $1.5 million in prejudgment interest.  Novartis will also provide status reports to the SEC for the next two years regarding remediation efforts and new anti-corruption compliance measures.

    China Switzerland Novartis Pharmaceutical

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  • Large International Bank Discloses Involvement in "Sons and Daughters" Investigation

    A large international bank on Monday became the latest bank to disclose requests for information from the SEC related to the long-running "Sons and Daughters" investigation into the hiring of “candidates referred by or related to government officials or employees of state-owned enterprises in Asia-Pacific.”  The bank noted that it “is cooperating with the SEC’s investigation.”

    Prior FCPA Scorecard coverage of other aspects of the "Sons and Daughters" investigation around the world is available here.

    SEC China Sons and Daughters

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  • Large International Bank Discloses Involvement in "Sons and Daughters" Investigation

    A large international bank on Monday became the latest bank to disclose requests for information from the SEC related to the long-running "Sons and Daughters" investigation into the hiring of “candidates referred by or related to government officials or employees of state-owned enterprises in Asia-Pacific.”  The bank noted that it “is cooperating with the SEC’s investigation.” Prior FCPA Scorecard coverage of other aspects of the "Sons and Daughters" investigation around the world is available here.

    China Sons and Daughters

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  • Massachusetts-Based Technology Company PTC and Two Chinese Subsidiaries Pay $28 Million to Settle Civil and Criminal FCPA Charges; SEC Uses First DPA With Individual

    On February 16, the SEC and DOJ announced a settlement with a Massachusetts-based technology company, PTC Inc., for violations of the FCPA.  PTC and two Chinese subsidiaries agreed to pay $28 million to settle the parallel civil and criminal actions, with PTC paying approximately $13.5 million in disgorgement and prejudgment interest to settle the SEC’s charges, and its two Chinese subsidiaries paying approximately $14.54 million in penalties in a Non-Prosecution Agreement with the DOJ.

    PTC admitted that its subsidiaries in Shanghai and Hong Kong provided non-business related travel and other improper payments to Chinese government officials to win business.  Specifically, from 2006 to 2011, the two subsidiaries provided nearly $1.5 million to Chinese officials in improper travel, gifts, and entertainment.  The Chinese officials were employed by state-owned entities that were PTC customers.  The travel and entertainment expenses included overseas trips to visit PTC facilities, including corporate headquarters in Massachusetts, but the majority of the time on the trips was spent on recreational excursions unrelated to the purported business purpose.  For example, PTC paid for Chinese officials to visit New York, Las Vegas, San Diego, Los Angeles, and Honolulu, as well as guided tours, golfing, and other leisure activities during those trips.  Employees of PTC’s subsidiaries also provided gifts to the Chinese officials, including cell phones, iPods, gift cards, wine, and clothing.  The payments were recorded in the company’s books and records as legitimate commissions or business expenses.

    As part of the investigation, the SEC also entered into its first Deferred Prosecution Agreement (DPA) with an individual in an FCPA case.  The SEC announced that it would wait three years to bring any FCPA charges against a former employee of one of the subsidiaries, Yu Kai Yuan, because of the cooperation he provided during the SEC’s investigation.

    DOJ SEC China FCPA Enforcement Action DAP PTC Inc.

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  • Massachusetts-Based Technology Company PTC and Two Chinese Subsidiaries Pay $28 Million to Settle Civil and Criminal FCPA Charges; SEC Uses First DPA With Individual

    On February 16, the SEC and DOJ announced a settlement with a Massachusetts-based technology company, PTC Inc., for violations of the FCPA.  PTC and two Chinese subsidiaries agreed to pay $28 million to settle the parallel civil and criminal actions, with PTC paying approximately $13.5 million in disgorgement and prejudgment interest to settle the SEC’s charges, and its two Chinese subsidiaries paying approximately $14.54 million in penalties in a Non-Prosecution Agreement with the DOJ. PTC admitted that its subsidiaries in Shanghai and Hong Kong provided non-business related travel and other improper payments to Chinese government officials to win business.  Specifically, from 2006 to 2011, the two subsidiaries provided nearly $1.5 million to Chinese officials in improper travel, gifts, and entertainment.  The Chinese officials were employed by state-owned entities that were PTC customers.  The travel and entertainment expenses included overseas trips to visit PTC facilities, including corporate headquarters in Massachusetts, but the majority of the time on the trips was spent on recreational excursions unrelated to the purported business purpose.  For example, PTC paid for Chinese officials to visit New York, Las Vegas, San Diego, Los Angeles, and Honolulu, as well as guided tours, golfing, and other leisure activities during those trips.  Employees of PTC’s subsidiaries also provided gifts to the Chinese officials, including cell phones, iPods, gift cards, wine, and clothing.  The payments were recorded in the company’s books and records as legitimate commissions or business expenses. As part of the investigation, the SEC also entered into its first Deferred Prosecution Agreement (DPA) with an individual in an FCPA case.  The SEC announced that it would wait three years to bring any FCPA charges against a former employee of one of the subsidiaries, Yu Kai Yuan, because of the cooperation he provided during the SEC’s investigation.

    China DAP PTC Inc.

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  • Massachusetts-Based Technology Company PTC and Two Chinese Subsidiaries Pay $28 Million to Settle Civil and Criminal FCPA Charges; SEC Uses First DPA With Individual

    On February 16, the SEC and DOJ announced a settlement with a Massachusetts-based technology company, PTC Inc., for violations of the FCPA.  PTC and two Chinese subsidiaries agreed to pay $28 million to settle the parallel civil and criminal actions, with PTC paying approximately $13.5 million in disgorgement and prejudgment interest to settle the SEC’s charges, and its two Chinese subsidiaries paying approximately $14.54 million in penalties in a Non-Prosecution Agreement with the DOJ. PTC admitted that its subsidiaries in Shanghai and Hong Kong provided non-business related travel and other improper payments to Chinese government officials to win business.  Specifically, from 2006 to 2011, the two subsidiaries provided nearly $1.5 million to Chinese officials in improper travel, gifts, and entertainment.  The Chinese officials were employed by state-owned entities that were PTC customers.  The travel and entertainment expenses included overseas trips to visit PTC facilities, including corporate headquarters in Massachusetts, but the majority of the time on the trips was spent on recreational excursions unrelated to the purported business purpose.  For example, PTC paid for Chinese officials to visit New York, Las Vegas, San Diego, Los Angeles, and Honolulu, as well as guided tours, golfing, and other leisure activities during those trips.  Employees of PTC’s subsidiaries also provided gifts to the Chinese officials, including cell phones, iPods, gift cards, wine, and clothing.  The payments were recorded in the company’s books and records as legitimate commissions or business expenses. As part of the investigation, the SEC also entered into its first Deferred Prosecution Agreement (DPA) with an individual in an FCPA case.  The SEC announced that it would wait three years to bring any FCPA charges against a former employee of one of the subsidiaries, Yu Kai Yuan, because of the cooperation he provided during the SEC’s investigation.

    China DAP PTC Inc.

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