The Securities and Exchange Commission charged Bruker Corp. (BRKR) with violating the Foreign Corrupt Practices Act or FCPA by providing non-business related travel and improper payments to various Chinese government officials in an effort to win business.
Bruker, which self-reported its misconduct and provided extensive cooperation during the SEC's investigation, agreed to pay approximately $2.4 million to settle the SEC's charges.
An SEC investigation found that Bruker Corporation lacked sufficient internal controls to prevent and detect approximately $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 approximately $1.7 million in profits from sales contracts with state-owned entities in China whose officials received the improper payments.
According to the SEC's order instituting a settled administrative proceeding, a Bruker office in China paid more than $111,000 to Chinese government officials under 12 suspicious collaboration agreements contingent on state-owned entities providing research on Bruker products or using Bruker products in demonstration laboratories.
The collaboration agreements did not specify the work product that the state-owned entities had to provide in order to be paid, and no work product 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 itself, and in some cases Bruker's office paid the official directly.
According to the SEC's order, the other improper payments involved reimbursements to Chinese government officials for leisure travel to the United States, Czech Republic, Norway, Sweden, France, Germany, Switzerland, and Italy. These officials often were responsible for authorizing the purchase of Bruker products, and the leisure trips typically followed business-related travel for the officials funded by the company.
The SEC's order finds that Bruker violated the internal controls and books and records provisions of the Securities Exchange Act of 1934. The company agreed to pay $1.71 million in disgorgement, $310,117 in prejudgment interest, and a $375,000 penalty.
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