The Anti-Corruption Report

The definitive source of actionable intelligence covering anti-corruption laws around the globe

Articles By Topic

By Topic: Travel Agencies

  • From Vol. 5 No.20 (Oct. 12, 2016)

    GSK SEC Settlement Highlights Multi-Jurisdictional Enforcement Risk

    Two years after the Chinese government fined GlaxoSmithKline $490 million for bribing health care practitioners there, the SEC has resolved FCPA charges with the company for $20 million for the same conduct. The settlement “does not refer to profit or gain figures, or tie the fine to such figures,” Gary DiBianco, a partner at Skadden, told The FCPA Report, which may mean the SEC took into account the Chinese government’s penalty. The DOJ declined to prosecute. The settlement is the latest in a series of FCPA actions against pharmaceutical companies. As a result of those investigations, compliance obligations negotiated as a part of settlements and proactive compliance improvements, anti-corruption programs in the pharmaceutical sector have evolved to be among the most sophisticated among all multinational corporations, DiBianco said. See also “Seven Lessons From China’s Bribery Investigation of GlaxoSmithKline” (Aug. 7, 2013). 

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  • From Vol. 5 No.7 (Apr. 6, 2016)

    Travel Agency Abuse, Falsified Expense Reports and Other Hospitality Blunders Lead to $25 Million Novartis Settlement

    In the fourth similar settlement in the last six months, pharmaceutical giant Novartis has agreed to pay $25 million to settle SEC charges that it violated the books and records and internal controls provisions of the FCPA by bribing foreign officials. “The Novartis case is essentially the GSK case, with fewer zeroes and headlines,” Amy Sommers, a partner in K&L Gates’ Shanghai office, told The FCPA Report. Indeed, the scheme underlying Novartis’ troubles is familiar – employees and agents of the company’s Chinese subsidiaries provided travel, gifts and entertainment to health care providers to encourage sales of Novartis’ products. “The Novartis case appears to have arisen by virtue of inquiries made by the SEC in the wake of reporting about the GSK case in 2013,” Sommers explained. See also our coverage of the SciClone, PTC and Bristol Myers Squibb settlements.

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  • From Vol. 5 No.3 (Feb. 10, 2016)

    Travel Agencies, Fapiao and Hospitality: $12.8 Million SciClone Settlement Highlights Diversity of Risk in China

    The allegations in the recent SciClone Pharmaceuticals’ FCPA settlement read like a “how to” manual for bribing foreign officials in China. SciClone employees paid for foreign officials to attend a beer festival, gave officials language classes as gifts, used travel agencies to disguise entertainment as legitimate conferences, submitted fake fapiao to falsify expense reports and more. To resolve these widespread bribery schemes at SciClone’s Chinese subsidiaries, the company, a U.S.-based, China-focused, specialty pharmaceutical company, agreed to pay $12.8 million and self-report to the SEC for a period of three years. We analyze the key compliance takeaways from the settlement. See also “The Emperor Is Far Away: The Evolving Nature of Third-Party Risk in China” (Sep. 9, 2015).

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  • From Vol. 4 No.8 (Apr. 15, 2015)

    $9.5 Million SEC FLIR Settlement Emphasizes Benefits of Self-Reporting and Importance of Internal Controls

    Employees often ask compliance officers about what is acceptable when entertaining or providing gifts to foreign officials.  How much is too much?  The FLIR fact pattern provides a clear case of “too much.”  Months after two of its employees had been sanctioned for the same behavior, FLIR Systems, Inc., an Oregon-based company that develops infrared technology, has resolved SEC charges that it took key officials of the Saudi Arabia Ministry of Interior on an extensive “world tour” and bought them luxury gifts.  “FLIR’s deficient financial controls failed to identify and stop the activities of employees who served as de facto travel agents for influential foreign officials to travel around the world on the company’s dime,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.  Despite the extravagant travel and gifts, FLIR did escape a DOJ enforcement action.  We discuss the details and takeaways from the case.  See also “A Guide to Preventing and Detecting Travel Agency Corruption (Part One of Three),” The FCPA Report, Vol. 3, No. 1 (Jan. 8, 2014); Part Two of Three, Vol. 3, No. 2 (Jan. 22, 2014); Part Three of Three, Vol. 3, No. 3 (Feb. 5, 2014).

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  • From Vol. 3 No.3 (Feb. 5, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part Three of Three)

    Travel agency fraud, the practice of using travel agencies to generate cash for illicit purposes and to evade company hospitality restrictions, is running rampant in China and many other countries, anti-corruption experts say.  The recent Chinese investigation of GlaxoSmithKline for using relationships with local travel agencies to provide government officials (mainly medical professionals) with improper benefits is one example.  Travel agency fraud is now on the radar of government regulators in the U.S. and abroad and thus, must be on the radar of any company operating internationally.  To assist companies in strengthening their anti-corruption compliance programs with regard to the use of travel agents, The FCPA Report is publishing a three-part series on identifying and preventing corruption involving travel agents.  This, the third article in the series, provides five concrete suggestions for preventing and detecting such fraud.  The first article detailed how travel agency fraud is accomplished and examined the motivations underlying such fraud.  The second article outlined industries that are at particular risk for travel agency-related corruption schemes, explained why travel agency fraud is so difficult to detect and provided tips for strengthening company control over travel agents.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013). 

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  • From Vol. 3 No.3 (Feb. 5, 2014)

    Nine Steps to Reduce Corruption Risk When Entertaining Clients at the 2014 Winter Olympics and Beyond

    In recent years, the SEC and DOJ have launched multiple anti-corruption investigations relating to corporate hospitality during major sporting events, such as the Olympics and the World Cup.  While anti-corruption laws do not generally prohibit travel, gifts or entertainment of customers for legitimate business purposes, the line between a bona fide business expense and one that might attract scrutiny from U.S. and other regulators can be grey.  In advance of this week’s Olympics in Sochi, Russia and the upcoming World Cup in Brazil, Kimberly A. Parker, Jay Holtmeier, Erin G.H. Sloane, Daniel F. Schubert, partners at WilmerHale, provide nine recommendations to help companies mitigate possible anti-corruption risk attendant to this type of corporate hospitality.  See also “Ten Strategies for Paying for Government Clients to Attend the Olympics or Other Sporting Events without Violating the Foreign Corrupt Practices Act,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012).

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  • From Vol. 3 No.2 (Jan. 22, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part Two of Three)

    China’s investigation into bribery at GSK in 2013 marked a potential new era in Chinese anti-corruption enforcement.  Notably, the Chinese government alleged that GSK used its relationships with local travel agencies to facilitate bribery – both to provide government officials with improper benefits and to host “conferences” that were used to generate pools of cash that could later be used for bribes.  GSK is not alone.  According to anti-corruption experts, in China and many other countries, travel agency fraud is part of a growing “industry” designed to help employees and subsidiaries evade company and legal regulations.  As regulators become more familiar with these types of schemes, it is likely that travel agency relationships will come under stricter government scrutiny.  To assist companies in strengthening their compliance programs with regard to the use of travel agents, The FCPA Report is publishing a three-part series on identifying and preventing corruption involving travel agents.  This, the second article in the series, outlines industries that are at particular risk for travel agent-related corruption schemes, explains why travel agency fraud is so difficult to detect and provides three steps for strengthening company control over travel agents.  The first article detailed how travel agency fraud is accomplished and examined the motivations underlying such fraud.  The third article will provide five concrete suggestions for preventing and detecting such fraud.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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  • From Vol. 3 No.1 (Jan. 8, 2014)

    A Guide to Detecting and Preventing Travel Agency Corruption (Part One of Three)

    Travel agency fraud is an increasing source of FCPA violations.  The recent GlaxoSmithKline investigation is a prime example of the risks travel agents can pose, especially in China but in other regions as well, and travel agent relationships will likely come under government scrutiny in the aftermath of the GSK matter.  Preventing corruption schemes using travel agents as the conduit for bribes can be difficult, however, as travel agency fraud can be easily hidden.  To assist companies in strengthening their compliance programs with regard to the use of travel agents, The FCPA Report is publishing a comprehensive three-part series on identifying and preventing corruption involving travel agents.  This, the first article in the series, details how travel agency fraud is accomplished and examines the motivations underlying such fraud.  The second article will outline industries that are at particular risk for travel agent-related corruption schemes, explain why travel agency fraud is so difficult to detect and provide tips for strengthening company control over travel agents.  The final article in the series will offer five concrete suggestions for preventing and detecting such fraud.  See also “Seven Lessons from China’s Bribery Investigation of GlaxoSmithKline,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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