Among recent enforcement actions were charges against a defense contractor by the Securities and Exhange Commission for Foreign Corrupt Practices Act violations regarding a “world tour” for government officials and a Department of Labor action that resulted in the restoration of $485,000 to a Connecticut retirement plan. The Financial Industry Regulatory Authority censured and fined a firm for failures surrounding the sale and purchase of corporate bonds.
SEC Charges Defense Contractor With ‘World Tour’ of Bribery
Oregon-based FLIR Systems Inc., a defense contractor, has been charged by the SEC with violating the Foreign Corrupt Practices Act (FCPA) for financing what an employee termed a “world tour” of personal travel for government officials in the Middle East who were instrumental in decisions to purchase FLIR products. FLIR made out on the deal, making more than $7 million in profits from the sales won by travel and gifts.
According to the agency, FLIR, which develops infrared technology for use in binoculars and other sensing products and systems, didn’t have much internal control over gifts and travel originating from its foreign sales offices.
In Dubai, two employees not only gave expensive watches to government officials with the Saudi Arabia Ministry of Interior in 2009, they also arranged for the company to pay for a 20-night excursion by Saudi officials that included stops in Casablanca, Paris, Dubai, Beirut and New York City.
The watches and trips were disguised as legitimate business expenses, and documentation that should have acted as red flags for inappropriate spending was disregarded.
From 2008 to 2010, the SEC says, FLIR paid approximately $40,000 for additional travel by Saudi government officials, including multiple New Year’s Eve trips to Dubai with airfare, hotel and expensive dinners and drinks. FLIR also accepted cursory invoices from a FLIR company partner without any supporting documentation to pay extended travel of Egyptian officials in mid-2011.
The company self-reported the misconduct to the SEC, and cooperated with the ensuing investigation. Without admitting or denying the charges, the company agreed to pay disgorgement of $7.53 million, prejudgment interest of $970,584 and a penalty of $1 million for a total of $9.5 million. Two employees were previously charged in the case.
Fiduciaries Ordered to Return $485,000 to Connecticut Retirement Plan