Three recent Foreign Corrupt Practices Act (“FCPA”) enforcement actions underscore the Department of Justice (“DOJ”) and the Securities and Exchange Commission’s (“SEC”) focus on prosecuting companies and individuals for improper gifts, meals, travel, and entertainment provided to foreign officials.
- Avon Products, Inc., the world’s largest direct seller of cosmetics, is expected to pay a $135 million fine to settle charges with the DOJ and the SEC arising from $8 million in illicit payments—consisting of cash, gifts, and travel and entertainment expenses—allegedly made by its Chinese subsidiary.
- Bruker Corporation, a global manufacturer of scientific instruments, agreed to pay $2.4 million to settle SEC charges after self-reporting $230,000 in improper payments to Chinese government officials that included reimbursements for non-business related travel, sightseeing, tour tickets, shopping, and other leisure activities throughout Europe and the United States.
- Two former defense contractor employees consented to SEC penalties of $50,000 and $20,000 for allegedly lavishing Saudi government officials with expensive watches and luxury travel.
Andrew J. Ceresney, Director of the SEC Enforcement Division, recently spoke about this enforcement priority. “[W]e will pursue employees of public companies who think it is acceptable to buy foreign officials’ loyalty with lavish gifts and travel. By making illegal payments and causing them to be recorded improperly, employees expose not only their firms but also themselves to an enforcement action.”
These enforcement actions are reminders that the FCPA prohibits the payment, offer, or promise of “anything of value”—a reminder that is particularly important for those that operate in countries where business partners often expect, or even demand, gifts. Companies and individuals should be mindful of their potential exposure and evaluate internal procedures and controls accordingly.
A copy of the Avon Products plea agreement can be found here. A copy of the Bruker settlement order can be found here. A copy of the enforcement action against the defense contractors can be found here.