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SEC releases final settlement order with Philips

The Securities and Exchange Commission on Tuesday released its final administrative order against Dutch electronics firm Koninklijke Philips Electronics N.V. reflecting an out-of-court settlement of FCPA-related allegations.

Philips agreed to pay $4.5 million in the settlement, consisting of disgorgement of $3.1 million and prejudgment interest of $1.4 million.

The SEC said that from 1999 to 2007, in at least 30 bids, employees of Philips’ subsidiary in Poland ‘made improper payments to public officials of Polish healthcare facilities to increase the likelihood that public tenders for the sale of medical equipment would be awarded to Philips.’

The bribes and kickbacks were 3% to 8% of the contract amounts, the SEC said.

Philips Poland employees also kept some of the money for themselves.

The improper payments ‘were falsely characterized and accounted for in Philips’s books and records as legitimate expenses. . . . supported by false documentation created by Philips Poland employees and/or third parties,’ the SEC said.

In 2009, Polish authorities arrested 16 people for healthcare-related bribery, including three Philips employees.

The compay then conducted an internal investigation that resulted in the firing of the three employees and disciplining others.

Philips self-reported the results of its investigation to the SEC and DOJ in 2010.

It violated the FCPA’s books and records and internal controls provisions, the SEC said.

Administrative settlements are handled internally by the SEC. They don’t involve the filing of civil complaints in federal court against the issuer, as seen in most SEC corporate enforcement actions for FCPA offenses.

The SEC said using a more lenient administrative action with Philips was justified by the company’s cooperation.

If an issuer violates the terms of an administrative order or is found to have provided false information, the SEC can later bring a civil enforcement action and impose financial penalties.


A copy of the SEC’s administrative action In the Matter of Koninklijke Philips Electronics N.V. (SEC Exchange Act of 1934 Release No. 69327, Accounting and Auditing Enforcement Release No. 3452, and Administrative Proceeding File No. 3-15265, all dated April 5, 2013) can be viewed and downloaded here.

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