Dutch multinational corporation, Philips, has agreed to pay a sum of $62 million to settle charges of violating the Foreign Corrupt Practices Act (FCPA) in connection with its conduct related to the sales of medical equipment in China.
The U.S. Securities and Exchange Commission (SEC) confirmed the news on Thursday, May 11, 2023, and Philips later issued a statement admitting no guilt, but accepting the charges.
According to the SEC, Philips had offered improper payments to Chinese healthcare professionals in order to obtain their business. These illegal payments were disguised as “sponsorship payments” and “consulting fees”.
Philips did not admit to the allegations of the SEC, but it agreed to pay approximately $62 million in disgorgement, civil penalties, and pre-judgment interest.
The U.S. Department of Justice (DoJ) had also launched a parallel investigation into the matter, which has now been closed as a result of the settlement. Regarding SEC and DoJ investigations into alleged tender irregularities that it claimed it was addressing in China, Brazil, and Bulgaria, Philips had made a provision of 60 million euros in its 2022 annual report.
The Philips CEO, Frans van Houten, said in a statement, “We deeply regret that this occurred and are committed to implementing all necessary measures to prevent this from happening again in the future. Philips has cooperated fully with the SEC and the DoJ, and we are pleased that we can now put this matter behind us and move forward.”
The FCPA prohibits U.S. companies, foreign companies listed on U.S. exchanges, and their employees and agents, from making improper payments to foreign officials for the purpose of obtaining or retaining business. The SEC and the DoJ are committed to enforcing the FCPA to ensure a level playing field for all businesses and to maintain the integrity.