Bruker pays $2.4m to resolve SEC charges
The firm, which self-reported the misconduct, agreed to pay $2.4m to settle the SEC’s charges relating to violations the Foreign Corrupt Practices Act (FCPA).
The company consented to the order without admitting or denying the findings.
SEC said the violations took place from at least 2005 through 2011.
Lack of controls
An SEC investigation found that Bruker lacked sufficient internal controls to prevent and detect $230,000 in improper payments out of its China-based offices that falsely recorded them in books and records as legitimate business and marketing expenses.
The payments enabled Bruker to realize $1.7m in profits from sales contracts with state-owned entities in China whose officials received the improper payments.
In a Form 8-K filed by the firm, it said in “August 2011…we made a voluntary disclosure to the US Department of Justice (DOJ) and the SEC of the results of an investigation by the Audit Committee of our Board of Directors regarding these matters and we have cooperated with the DOJ and SEC in connection with their investigations.”
A Chinese Bruker office paid more than $111,000 to country government officials under 12 suspicious collaboration agreements contingent on state-owned entities providing research on Bruker products or using them in demonstration laboratories, according to the SEC’s order.
The collaboration agreements did not specify the work product the state-owned entities had to provide to be paid, and no work was actually provided to the Bruker office by the state-owned entities.
Certain collaboration agreements were executed directly with a Chinese government official rather than the state-owned entity, and in some cases Bruker’s office paid the official directly, said SEC.
“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,” said Kara Brockmeyer, chief of the SEC enforcement division’s FCPA unit.
Reimbursements for leisure travels
According to the SEC, other improper payments involved reimbursements to Chinese government officials for leisure travel to the US, Czech Republic, Norway, Sweden, France, Germany, Switzerland and Italy.
These officials were often responsible for authorizing the purchase of Bruker products and typically followed business-related travel for officials funded by the company, it said.
Bruker also funded trips for Chinese government officials that did not involve legitimate business.
The firm said in the order, the SEC recognized its “extensive, thorough, and real-time cooperation with the Commission.”
The amounts to be paid were fully accrued as of September 30, said Bruker in the 8-K filing.
“Effective December 15, 2014, the company consented to the entry of an administrative cease-and-desist order by the SEC concerning violations of the books and records and internal controls provisions of the FCPA.
“Pursuant to the order, we will pay an aggregate amount of $2.4m, consisting of $1,714,852 in disgorgement, $310,117 in prejudgment interest, and a $375,000 penalty.”
