Koninklijke Philips to Pay Over $62 Million to Settle FCPA Charges on Conduct in China
Amsterdam-based multinational conglomerate Koninklijke Philips will pay more than $62 million to settle charges it violated the Foreign Corrupt Practices Act related to its sales of medical diagnostic equipment in China, the SEC announced. Without admitting guilt, Philips agreed to pay $15 million in civil penalties and over $47 million in disgorgement and prejudgment interest.
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Philips' Chinese subsidiaries, collectively referred to as Philips China, used "special price discounts with distributors that created a risk that excessive distributor margins could be used to fund improper payments to government employees," the SEC said. The agency also found that Philips China's employees, distributors or sub-dealers improperly influenced hospital officials to draw up technical specifications in public tenders favoring Philips' bids. These parties were found to have engaged in "improper bidding practices" by creating additional bids with other manufacturers' products to "create the appearance of legitimate public tenders and to meet the minimum bids requirement under Chinese public tender laws," the SEC said.