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From Securities Regulation Daily, April 8, 2015

Contractor’s wining, dining, and travel ran afoul of Foreign Corrupt Practices Act

By Jacquelyn Lumb

The SEC today announced a settled cease-and-desist proceeding against FLIR Systems, Inc. for violations of the anti-bribery, books and records, and internal control provisions of the Foreign Corrupt Practices Act. FLIR settled the charges by agreeing to pay more than $9.5 million and to provide updates to the SEC for the next two years with respect to its FCPA compliance efforts. Two employees of FLIR provided unlawful travel, gifts, and entertainment to foreign officials in the Kingdom of Saudi Arabia to obtain or retain business, according to the SEC’s order. The extent and nature of the travel and the value of the gifts were concealed by employees and were falsely recorded in FLIR’s books and records. According to the SEC’s news release, the employees were previously charged in this matter (In the Matter of FLIR Systems, Inc., April 8, 2015).

FLIR develops infrared technology for use in thermal imaging, including night vision cameras, for government and commercial customers. Two of its Dubai-based employees were the primary sales persons responsible for a contract with the Saudi Arabia Ministry of Interior (MOI) to sell approximately $12.9 million worth of binoculars. The employees also were involved in negotiations to sell security cameras to the MOI and hoped to win additional business.

Lack of internal controls. According to the SEC’s order, the company had few internal controls over gifts and travel out of its foreign sales offices. Its employees provided expensive watches to government officials in the MOI in 2009 and arranged to pay for a multiple city tour by Saudi officials, which included only a brief visit to FLIR’s Boston facility. The two employees also arranged for additional travel within Saudi Arabia, including hotel, expensive dinner, and drinks, all booked as business expenses.

Remedial efforts. FLIR self-reported the conduct after receiving a complaint from a third party agent and conducting an internal investigation. The SEC said that FLIR undertook significant remedial efforts, including personnel and vendor terminations. FLIR reportedly enhanced access to its anti-bribery policy and enhanced its travel approval system in foreign offices.

FLIR was ordered to pay disgorgement of over $7.5 million plus prejudgment interest and a civil money penalty of $1 million. The company must report at least every nine months for two years on the status of its review of its overseas operations and on its remediation and compliance measures.

The release is No. 34-74673.

Companies: FLIR Systems, Inc.

MainStory: TopStory Enforcement

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