CROOK NEWS: InVision settles with SEC for $1.1M (two mos ago) By Shawn Langlois, MarketWatch Last Update: 2:15 PM ET Feb. 14, 2005
SAN FRANCISCO (MarketWatch) - InVision Technologies will pay $1.1 million in penalties to settle federal regulators' allegations that the bomb-detector company bribed foreign officials, the U.S. Securities and Exchange Commission said Monday. Newark, Calif.-based InVision was charged with violating the Foreign Corrupt Practices Act for making illegal payments to foreign government officials from "at least" June 2002 through June 2004. "InVision was aware of a high probability that its foreign sales agents or distributors made or offered to make improper payments to foreign government officials in order to obtain or retain business for InVision," the SEC said. InVision agreed to the settlement without admitting or denying any wrongdoing.
In December 2004, General Electric (GE: news, chart, profile) acquired the company, which now operates under the name GE InVision Inc. The SEC said that the improper conduct occurred before the GE deal."Today's settlement demonstrates the Commission's commitment to ensuring that companies monitor the activities of their foreign sales agents and adequately investigate allegations of improper payments to foreign officials," said Helane Morrison, district administrator for the SEC in San Francisco.
In December, InVision settled with the U.S. Justice Department for $800,000 and said it would continue to cooperate with the Securities and Exchange Commission in its investigation. Shares of General Electric held steady in flat territory at $36.23 in afternoon trading.
Inappropriate payments by distributors may trigger FCPA investigation
PREPARED FOR TRACE BY BILL STEINMAN, PARTNER, POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
InVision Technologies, Inc. announced on July 30, 2004 that it had made a voluntary disclosure to the Department of Justice and the Securities and Exchange Commission regarding potential improper payments made by at least one of InVision's distributors in connection with sales outside the United States. InVision, a U.S. manufacturer of explosives detection equipment used in the civil aviation industry, is currently an acquisition target of General Electric. According to InVision's press releases, the enforcement agencies may commence investigations of the company to determine whether it has violated the Foreign Corrupt Practices Act. InVision stated that questions have arisen about at least one distributor who purchased products from InVision on an arms-length basis.
If the enforcement agencies pursue the matter, it will represent one of the first FCPA investigations involving distributors. Typically, FCPA cases involving third parties arise out of the activities of sales representatives or consultants - intermediaries who assist a U.S. supplier to promote its products, but who do not take title or possession of the goods. Rather, these intermediaries act on behalf of the supplier in promoting their underlying sale. In contrast, a traditional distributor purchases the products from the supplier, and then resells them in its own name and on its own behalf to the ultimate customer. The distributor, and not the manufacturer, is a party to the final sale with the end user and generally controls pricing. The fact that the traditional distributor has the customer relationship has generally been seen as a shield, protecting the manufacturer from liability for illicit payments made by a distributor to foreign government customers - at least if the manufacturer had no reason to expect that such conducting was taking place. As a result of this distinction, many companies have conducted a less extensive due diligence review of potential distributors than sales representatives or consultants. A DOJ/SEC enforcement action arising out of the activities of distributors could substantially expand the reach of the FCPA, and force U.S. companies to dedicate greater resources to the review of their distributors to ensure that they have good business ethics.
TRACE International, Inc. 2121 K Street, NW Suite 700 Washington, DC 20037 www.traceinternational.org.
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http://lawprofessors.typepad.com/whitecollarcrime_blog/2004/12/invision_settle.html December 8, 2004 - InVision Settles With DOJ InVision Technologies, Inc. (a recent acquisition of GE) and the government reached an agreement, with the company paying $800,000 in penalties and providing cooperation in "parallel investigations" with the DOJ and SEC.
The company which specializes in homeland security equipment agreed not only to pay this penalty, but according to a DOJ news release, also to "[f]ully and affirmatively disclose to the Department and the SEC activities that InVision believes may violate the FCPA (Foreign Corrupt Practices Act), and continue to cooperate with the Department and the SEC in their investigations." Both InVision and GE signed agreements including GE agreeing to "integrate the InVision business in GE's FCPA compliance program."
It seems that the FCPA is in the news a good bit lately (Check out this blog's entries of November 3, 8, and 16).
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