Syncor impropriety charges seen as SOP in Asia. (Media & Technology).

INTERNATIONAL trade experts admit that, while Syncor International's planned acquisition by Ohio-based Cardinal Health Inc. could be in jeopardy over alleged improper payments to health care companies in Asia, such payments are frequently the cost of doing business in that region.

"In the United States we leave a tip for services rendered and as a reward for good service, but in many parts of the world, especially in Asia, it's a way to insure a deal," said Angi Ma Wong, a Palos Verdes-based corporate trainer and expert on business relations with China.

Woodland Hills-based Syncor revealed Nov. 6 that officials of its Asian subsidiaries had made illegal payments to health care companies in foreign countries, including China and Taiwan. The company said it is investigating the matter.

Cardinal Health agreed to acquire Syncor on June 14 as part of a stock swap valued at about $960 million. The deal calls for Cardinal Health to assume Syncor's $202 million debt.

"In China, people don't look at it as a bribe, but as a way of doing business. It's the way you have to do things there or you're not going to get anywhere," Wong said.

But the problem lies in the size of deals that companies make. The bigger the deal, the bigger the bribe or so-called gratuity, said Susan Allen, an Asian trade expert and board member of the U.S. Pan Asian American Chamber of Commerce in Washington D.C.

"That's where companies can get into trouble," she said.

Syncor's alleged illegal payments were discovered by Cardinal Health officials combing through the company's books in anticipation of its acquisition. Syncor makes and distributes radioactive compounds used for diagnostic or therapeutic purposes, allowing doctors to treat patients without surgery.

Syncor's action resulted in a halt in trading for the company's stock on Nov. 6 when Nasdaq officials asked for more information regarding the issue. Trading was resumed later that day.

The investigation focuses on transactions in several countries, including China and Taiwan, where Syncor said payments were made to private and state-owned medical facilities in violation of both foreign and U.S. law.

Syncor said its chairman, Monty Fu, and his brother, Moses Fu, who serves as a director for the company's Asia Region, have agreed to go on paid leave pending the end of the investigation.

Charles Ree, an analyst with Solomon Smith Barney, said he does not believe Cardinal Health is using the issue as a way to back out of the deal.

"A lot of that kind of thing goes on in Asia and a lot of people recognize that, but I don't think it's a ploy that Cardinal is using," he said.

"(Syncor)'s still a viable asset, but (Cardinal Health Chairman) Robert Walter isn't going to risk his reputation to get an asset."

Syncor has met with government regulators, including members of the Securities and Exchange Commission and the Justice Department, and has said it will "cooperate fully" on the matter.

A Nov. 19 shareholders meeting where a vote on the merger with Cardinal Health was scheduled has been postponed until Dec. 6.

Business Journal reporter Carlos Martinez may be reached at [phone] ext. 17 or by e-mail at [e-mail]