Dutch medical device maker Koninklijke Philips N.V. PHG will pay $62 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) concerning conduct related to its sales of medical diagnostic equipment in China.
Philips has agreed to return $47 million in profits from the alleged misconduct, plus interest, and pay a $15 million civil penalty.
The Securities and Exchange Commission said Philips had agreed to settle its claims without admitting to or denying the findings from its investigation.
The SEC said Philips had engaged in several strategies in China between 2014 and 2019 that violated the FCPA.
The SEC added that Philips’s subsidiaries in China violated the law’s internal controls and books and records provisions.
According to the SEC’s order, Philips’ subsidiaries in China, cumulatively referred to in the order as Philips China, used special price discounts with distributors, creating a risk that excessive distributor margins could be used to fund improper payments to government employees.
The SEC’s order also found that employees, distributors, or sub-dealers of Philips China engaged in improper conduct to influence hospital officials to draft technical specifications in public tenders to favor Philips’ products.
The order further found that the employees, distributors, or sub-dealers engaged in improper bidding practices.
Price Action: PHG shares are down 1.30% at $20.46 on the last check Friday.
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