By Will Feuer
3M has agreed to pay $6.5 million to settle charges that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act.
Employees of 3M’s subsidiary in China arranged for Chinese government officials employed by state-owned enterprises to attend overseas conferences and other events as a pretext to provide the officials with overseas travel and tourism to induce them to buy 3M products, the Securities and Exchange Commission said.
From at least 2014 to 2017, 3M’s Chinese subsidiary provided government officials with overseas travel that included shopping, tours and other leisure activities, the SEC said. In some instances, the tourism activities were scheduled at the same time as the events the officials were supposedly attending.
The SEC said the official events were in English and some of the trips included Chinese government officials who neither understood English nor had adequate translation services.
Between February 2016 and September 2018, employees of 3M’s China-based subsidiary had 3M transfer $254,000 directly to a Chinese travel agency to help pay for some of the improper tourism activities, the SEC said.
“This matter highlights the dangers to companies with global operations posed by inadequate internal accounting controls,” said Charles Cain, chief of the SEC’s FCPA unit. “Those dangers were exacerbated here by complicit third-party vendors.”
Representatives for 3M didn’t immediately respond to a request for comment.
Write to Will Feuer at [email protected]
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