International Travel, Gifts Result in FCPA Penalty for FLIR.

FLIR Systems agreed to pay $9.5 million to the SEC for FCPA violations. The company providing foreign officials with a 20-night world tour, luxury watches and other expenses. The government officials played a key role in a government contract for the purchase FLIR products by Saudia Arabia.

The world tour included stops at multiple locations including Dubai, Paris and New York. The stops served no legitimate business purpose. Travel and entertainment can be legitimate business expenses that do not violate the law. However, if the travel is actually a bribe to obtain or retain business, it violates the Foreign Corrupt Practices Act.

FLIR Systems is a U.S. defense contractor that makes infrared night vision and heat sensing devices. The products at issue in the investigation were binoculars. FLIR self-disclosed the violations to the U.S. Government. The penalty included disgorgement of more than $7.5 million in profits. Two employees of FLIR previously settled the allegations against them. The SEC resolved the enforcement action against the individuals in November.

Saudia Arabia is currently in the top 10 countries for the most active corporate investigations regarding violations of the FCPA.  Transparency International ranks it on its corruption perceptions index as number 55 out of the 175 countries.  It has a score of 49 out of 100, putting it right in the middle of the scale from most corrupt (0) to least corrupt (100).

Improper travel expenses seems to be at the heart of a few different FCPA cases recently. The allegations against GlaxoSmithKline, for example, involve trips for doctors in China to fictitious conferences and paying for the spouses of doctors in Jordan to accompany them on trips. The investigation of Avon which resulted in a $135 million settlement last May also reportedly included allegations of payment for travel within China, Europe and the United States.

Individuals with evidence of corporate payments for improper travel of government officials or employees of state-owned enterprises should contact one of our FCPA lawyers for additional information about the SEC whistleblower program.

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