3M Pays $6.5 Million to Settle FCPA Charges
Consumer goods conglomerate 3M agreed to pay over $6.5 million to settle charges it violated the Foreign Corrupt Practices Act's internal controls provisions, the SEC announced Aug. 25. 3M's China-based subsidiary allegedly arranged for Chinese government employees of state-owned healthcare facilities to travel to international conferences, educational events and healthcare facility visits as part of the subsidiary's "marketing and outreach efforts."
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The SEC alleged these activities were often just a cover to pay for the Chinese officials' travel, including "tourism activities," to get them to buy 3M products. From 2014 to 2017, the subsidiary provided the officials with travel accommodations, which included "guided tours, shopping visits, day trips to nearby sights, and other leisure activities," the SEC said.
These activities were often scheduled at the same time as conferences or facility visits. The SEC alleged 3M's subsidiary paid nearly $1 million for at least 24 trips. Additionally, the SEC said that from 2016 to 2018, subsidiary employees transferred nearly $254,000 to a Chinese travel agency to set up "improper tourism activities."
A spokesperson for 3M said in an email that the company discovered certain of its employees circumvented established controls and ethics policies to set up the tourism activities. "3M is committed to ethics and compliance in every aspect of our operations," the spokesperson said, noting that the company self-reported the issues to the government, cooperated with the proceeding and took action to address the violations.