Bruker to pay $2.4m to settle SEC charge of improper payments in China
Bruker was charged on December 15 under the Foreign Corrupt Practices Act (FCPA) following an SEC investigation prompted by a voluntary report of suspected misconduct at the firm’s Optics subsidiary in August 2011.
According to the SEC, staff at the Optics unit – which makes analytical technologies for the biopharmaceutical sector - paid a total of $230,000 to Government officials and falsely recorded the payments as legitimate business and marketing expenses.
Chinese officials who received the payments were often “responsible for authorizing the purchase of Bruker products, and the leisure trips typically followed business-related travel for the officials funded by the company” according to the SEC.
“For example, Bruker paid for the purported training expenses of a Chinese government official who signed the sales contract on behalf of a state-owned entity, but the payment actually was reimbursement for sightseeing, tour tickets, shopping, and other leisure activities in Frankfurt and Paris."
The SEC said Bruker had realized approximately $1.7m in profits from sales contracts with state-owned entities in China as a result of the payments.
Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, said: “Bruker’s lax internal controls allowed employees in its China offices to enter into sham ‘collaboration agreements’ to direct money to foreign officials and send officials on sightseeing trips around the world.”
The Massachusetts laboratory instrument firm announced it had agreed to settle the charge in a filing last night.
While Bruker did not admit to or deny the allegations, it did say $1.7m of the payment was a “disgorgement,” which is defined as the act of giving up illegally obtained profits in Black’s Law Dictionary.
The rest of the payment will by a $310,117 for prejudgment interest and a $375,000 penalty.
Bruker also said the SEC had recognised its “extensive, thorough, and real-time cooperation” and that remedial acts were promptly undertaken.
In a filing in 2012 (page 17), Brucker said it had “taken personnel actions, including the termination of certain individuals” and ended business relationships with certain third party agents during its investigation of the payments.