FCPA Violations by Philips

FCPA Violations by PhilipsFCPA Violations requires Philips to pay pay disgorgement of $3,120,597 and prejudgment interest of $1,394,581 to the United States Treasury

FCPA Violations by Philips

Since at least 1999, Philips has participated in public tenders to sell medical equipment to Polish healthcare facilities. From 1999 through 2007, in at least 30 transactions, employees of Philips Poland made improper payments to public officials of Polish healthcare facilities to increase the likelihood that public tenders for the sale of  medical equipment would be awarded to Philips.

Representatives of Philips Poland entered into arrangements with officials of various Polish healthcare facilities whereby Philips submitted the technical specifications of its medical equipment to officials drafting the tenders who incorporated the specifications of Philips’ equipment into the contracts. Incorporating the specifications of Philips’ equipment in the tenders’ requirements greatly increased the likelihood that Philips would be awarded the bids.

Certain of the healthcare officials involved in the arrangements with Philips also decided whom to award the tenders, and when Philips was awarded the contracts , the officials were paid the improper payments by employees of Philips Poland.
The improper payments made by employees of Philips Poland to the Polish healthcare officials usually amounted to 3% to 8% of the contracts’ net value.

Koninklijke Philips Electronics N.V. is a Netherlands-based parent of an affiliation of companies that manufacture and supply goods and services related to healthcare,consumer lifestyle,lighting business sectors.

 

Swiss Banking disclosures by Arvind Kejriwal

On 9.11.2012, Anti-corruption activist made a press statement saying that there are Rs. 6000 crores in just 700 accounts in HSBC Bank.We have analysed the position of these allegations in line with our research published on corruption and the impact of FCPA

Forget the politics involved in the statements made by Kejriwal but the objective assessment of the financial system is really essential. Some of his major Allegations are

  1. The paper we will present today suggests that black money in Swiss banks can return to India but will not since the govt is in  cahoots with criminals.
  2. The present CBI director estimates there are over 500 crores stashed abroad.
  3. We got a CD – HSBC’s Geneva branch has 700 accounts of Indian nationals. That list is available with the government with the amounts in the accounts in December 2006.
  4. We do not have the full list  but we have some names- Mukesh Ambani  has Rs. 100 crores.
  5. Anil Ambani has Rs. 100 crores
    Sandeep Tandon – former IRS, ED official – who raided Reliance has Rs. 125 crores
  6. Reliance Industries Rs. 200 crores
    Sandeep Tandon’s wife Anu, who is now Congress MP from Unnao – and a member of Rahul Gandhi’s core group – has Rs. 125 crores.
  7. Motech Software Private Ltd (Reliance Group company) – Rs. 2,100 crores
  8. Kokila Dhirubhai Ambani has an account but in December 2006 it had no balance.
  9. Naresh Goyal has Rs. 80 crores.
  10. From Dabur – 3 members have accounts – totalling Rs. 25 crores.
  11. Yashovardhan Birla has an account but in December 2006 it has no balance.
  12. CBI had said there is Rs. 25 lakh crores – these 700 names account for only Rs. 6000 Crores.
  13. In 28 July 2011, the Income Tax (IT) Department raided three people in Delhi based on this list.
  14. Opening an account in a Swiss bank is easier than opening an account in SBI Bank. For a Swiss bank account you need to just make a call. for an SBI account you need to visit the branch. This is real easy – why would you have an SBI account – just go to a Swiss Bank. – We analysed this in detailed and have created a separate article on the same.
  15. Finance Ministry sources say that Mukesh Ambani met Finance Minister and said ” they were prepared to pay tax to buy peace.”
  16. Even Mukesh Ambani must explain how the Rs. 100 crores reached Swiss bank, how the account was operated – do they indulge in Hawala transactions? And if they do then they should have been arrested.
  17. All the people – they should furnish all details of their accounts – all the debit entries must be checked.
  18. We would then know who all were bribed by money paid out from these accounts.
  19. We demand a raid immediately be carried out on Mukesh Ambani, Anil Ambani, Naresh Goyal, Yash Birla and the three Dabur brothers – and if hawala is proved, they should be arrested.
  20. Voluntary Disclosure Scheme (VDS) was designed to save these 700 people.
  21. The government lied in Parliament that it had info of Rs. 565 cr – we know there was info of Rs. 6000 crores and they have recovered only Rs. 181 crores.
  22. HSBC is promoting kidnapping, corruption and terrorism in India by facilitating Hawala.
  23. In Pakistan, if someone wants money to reach India, they can do it through HSBC.
  24. In July, the US government realised that HSBC had some transactions which was making US vulnerable to drug , terror and illicit money. In that probe, they realised that HSBC operations in India were suspect.
  25. The Union Government gave a clean chit to HSBC employees in one month.
  26. The UBS bank shared a list of  account holders with the US government – if the government wants HSBC and UBS operations in India can be shut down and their bosses arrested.
  27. HSBC’s top officers should be arrested and cases should be made out for waging war against India.
  28. HSBC’s operations in India should be suspended – they should be forced to make a disclosure of accounts held by Indians – and the government should make it public.

SEC Charges Tyco with illicit payments

Securities and Exchange Commission today announced that it filed a settled civil action in the United States District Court for the District of Columbia against Tyco International Ltd. The complaint alleges that Tyco violated the books and records, internal controls, and anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Tyco has agreed to pay over $13 million in disgorgement and prejudgment interest to settle the charges.

In April 2006, the Commission filed a settled accounting fraud, disclosure, and FCPA injunctive action against Tyco. At the time of the 2006 settlement, Tyco had committed to and commenced a review of its FCPA compliance and a global internal investigation of possible additional FCPA violations. As a result of that review and investigation, certain FCPA violations have come to light for which the misconduct occurred, or the benefit to Tyco continued, after the 2006 injunction. Those are the violations that are alleged in today’s complaint.

Accordingly, the Commission’s complaint alleges that, from 2006 to 2009, Tyco subsidiaries operated twelve illicit payment schemes. Many of the schemes involved fake commissions and related payments, and several also included the use of third-party agents to funnel money improperly. The complaint further alleges that Tyco’s books and records were misstated as a result of the misconduct and that Tyco failed to devise and maintain internal controls sufficient to detect the violations. The complaint also alleges that payments by a sales agent to Turkish government officials violated the anti-bribery provisions of the FCPA.

Source:http://www.sec.gov/litigation/litreleases/2012/lr22491.htm

Date:24th September, 2012.

Foreign Corrupt Practices Act – Indian Perspective

According to the news on FCPA media site fcpablog.com, Oracle Corporation agreed to pay a $2 million civil penalty to the SEC to settle FCPA charges arising from a slush fund in India used to pay bribes.

FCPA investigations are extending beyond the American Borders and have reached the Indian shores. Oracle is not the first company to settle the case with SEC. For the FCPA consultants it has become a big challenge to investigate the FCPA violations in India.

A key element of the FCPA due diligence is effective screening of all parties related to overseas business activities. To assist the parties in due diligence, Department of Justice has outlined some “red flags”. I am endevouring to elaborate the same based on Riskpro’s experience in assisting the FCPA investigations across the globe.

  • A history of corruption in the country – India ranks low on the rankings and the recent media breakouts show that the corruption is rampant in India. Corruption in India dates back to 1948 when Independent India’s first corruption scam broke.
  • Unusual payment patterns or financial arrangements – In India unusual trend was observed in the corruption scandal of commonwealth games. The sports equipments which could have been bought at Rs.100 were rented from few companies for Rs.110.
  • Unusually high commissions – The FCPA prohibits corrupt payments through intermediaries. It is unlawful to make a payment to a third party, while knowing that all or a portion of the payment will go directly or indirectly to a government  official. Foreign companies ask for the intermediaries to conduct the sales to Government. In India, having a sole proprietor distributorship helps the companies as the person involved in paying the bribes often fails to maintain the records.

SEC files settled FCPA charges against Pfizer & Wyeth

Fraudtoday Pfizer Inc. is penalised by SEC for violating the Foreign Corrupt Practices Act (FCPA). Its subsidiaries bribed doctors and other health care professionals employed by foreign governments in order to win business.

The SEC alleges that employees and agents of Pfizer’s subsidiaries in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales, and increased prescriptions for the company’s pharmaceutical products. They tried to conceal the bribery by improperly recording the transactions in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising.

The SEC filed a separate settled enforcement action in the U.S. District Court for the District of Columbia against another pharmaceutical company that Pfizer acquired a few years ago – Wyeth LLC – for its own FCPA violations. Pfizer and Wyeth agreed to separate settlements in which they will pay approximately $45 million combined in disgorgement and prejudgment interest to the SEC to settle their respective charges. In a related action, Pfizer H.C.P. Corporation, an indirect wholly owned subsidiary of Pfizer, will pay a $15 million penalty to settle FCPA charges brought against it today by the U.S. Department of Justice (DOJ) under a deferred prosecution agreement.

The SEC’s complaint against Pfizer alleges that Pfizer’s misconduct dates back as far as 2001. According to the SEC’s complaint, employees of Pfizer’s subsidiaries authorized and made cash payments and provided other incentives to bribe government doctors to utilize Pfizer products. In China, for example, the SEC’s complaint alleges that Pfizer employees invited “high-prescribing doctors” in the Chinese government to club-like meetings that included extensive recreational and entertainment activities to reward doctors’ past product sales or prescriptions. In addition, according to the SEC’s complaint, Pfizer employees in Croatia created a “bonus program” for Croatian doctors who were employed in senior positions in Croatian government health care institutions. According to the SEC’s complaint, once a doctor agreed to use Pfizer products, a percentage of the value purchased by a doctor’s institution would be funneled back to the doctor in the form of cash, international travel, or free products.

According to the SEC’s complaint, Pfizer made an initial voluntary disclosure of misconduct by its subsidiaries to the SEC and Department of Justice in October 2004, and fully cooperated with SEC investigators. The complaint alleges that Pfizer took such extensive remedial actions as undertaking a comprehensive worldwide review of its compliance program.

The SEC further alleges that Wyeth subsidiaries engaged in FCPA violations, primarily before, but also after, the company’s acquisition by Pfizer in late 2009. For example, according to the SEC’s complaint, starting at least in 2005, subsidiaries marketing Wyeth nutritional products in China, Indonesia, and Pakistan bribed government doctors to recommend their products to patients by making cash payments or in some cases providing BlackBerrys and cell phones or travel incentives. The complaint alleges that Wyeth’s employees often used fictitious invoices to conceal the true nature of the payments.

According to the SEC’s complaint, following Pfizer’s acquisition of Wyeth, Pfizer undertook a risk-based FCPA due diligence review of Wyeth’s global operations and voluntarily reported the findings to the SEC staff. The complaint alleges that Pfizer diligently and promptly integrated Wyeth’s legacy operations into its compliance program and cooperated fully with SEC investigators.

Source: http://www.sec.gov/litigation/litreleases/2012/lr22438.htm

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