New FCPA Cases Heighten Scrutiny Of Intermediaries In China.Keywords:AGA Medical Coproration, Faro Faro, town, Portugal Faro (fä`rō), town (1991 pop. 31,966), capital of Faro dist. and of Algarve, S Portugal. The southernmost town in Portugal, it is a seaport from which fish, fruit (especially dried figs), wine, and cork are Technologies, Foreign Corrupt Practices Act Foreign Corrupt Practices Act An amendment to the Securities Exchange Act created to sanction bribery of foreign officials by publicly held US companies. Foreign Corrupt Practices Act , FCPA FCPA Foreign Corrupt Practices Act FCPA Fairfax County Park Authority (Virginia) FCPA Fujitsu Computer Products of America FCPA Fair Campaign Practices Act FCPA Fellow of CPA Australia FCPA Florida Concrete & Products Association , bribery, China, government-owned hospital, corrupt payment, referral fees AGA Medical Corporation (AGA), a privately-held, US medical device manufacturer, and Faro Technologies Inc. (Faro), a public company specializing in computerized measurement devices and software, have agreed to pay $2 million and $1.1 million in criminal penalties, respectively, in connection with corrupt payments to Chinese government Ever since Republic of China founded in January 1st, 1912, China has had several regional and national governments. List
prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. press releases issued by the US Department of Justice (DOJ (Department Of Justice) The legal arm of the U.S. government that represents the public interest of the United States. It is headed by the Attorney General. ). The DOJ's enforcement actions against AGA and Faro highlight the FCPA risks of doing business with intermediaries in China. AGA According to the DOJ, between 1997 and 2005, AGA's distributor in China made improper payments to physicians employed by government-owned hospitals in exchange for purchases of AGA's products. Senior AGA employees approved improper "discounts" and "commissions" paid to the Chinese doctors who controlled purchasing decisions at these state-owned hospitals. In addition, between 2000 and 2002, AGA senior employees authorized payments through the company's Chinese distributor to government officials employed by China's State Intellectual Property Office to ensure patent approval of several AGA products. DOJ has charged AGA, in a criminal Information filed in US District Court in Minnesota, with one count of conspiring to make corrupt payments to Chinese officials to obtain and retain business and one count of violating the FCPA by authorizing improper payments to government officials in China. AGA has entered into a deferred prosecution agreement with DOJ, requiring cooperation, an enhanced compliance program, and engagement of an independent corporate monitor. If AGA abides by the agreement for three years, DOJ will dismiss the charges. Click here for full DOJ press release Faro Beginning in 2003, Faro used its subsidiary in China to sell products directly to the Chinese automotive, aerospace and consumer goods consumer goods Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and industries. In 2004 and 2005, a Faro employee authorized "referral fees" as payments by other Faro employees to employees of state-owned or controlled Chinese entities to secure contracts for Faro. In 2005, Faro used an intermediary to make these improper payments to "avoid exposure." Faro also falsely described these bribe payments in its books and records as referral fees. DOJ has agreed to enter into a non-prosecution agreement with Faro for a two year term. The company also has agreed to engage an independent corporate monitor. Click here for full DOJ press release Lessons Learned Under the FCPA, US individuals and companies are prohibited from making improper payments to foreign officials for the purposes of influencing their decisions in order to obtain or retain business. These cases highlight several important compliance lessons. First, the AGA enforcement action is one of the few FCPA cases involving company liability for independent distributors. Second, while US businesses often retain distributors and other intermediaries to navigate the Chinese market, these cases highlight the substantial FCPA risk in using third parties. Companies that knowingly use intermediaries for bribing government officials in China to secure product sales will be prosecuted. Third, identities of "foreign officials" in China are broadly defined and include physicians employed by government-owned hospitals. Fourth, the AGA case confirms that the DOJ remains focused on the medical device industry. Fifth, AGA and Faro highlight the DOJ's heightened focus on business operations in China. Minimizing FCPA Risks In China As the AGA and Faro actions illustrate, compliance with the FCPA presents significant challenges to US companies conducting business in China. Minimizing FCPA risks in relationships with third parties, including distributors, requires a robust compliance program, due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. prior to retention, contractual provisions, certifications, training and post-retention oversight. The AGA and Faro enforcement actions provide an opportunity for companies operating in China through intermediaries to review their FCPA practices to make appropriate improvements. 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The Mayer Brown Practices are known as Mayer Brown JSM in Asia. This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Copyright 2008. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved. Ms Kristy Balsanek Mayer Brown 71 S. Wacker Wacker may refer to:
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