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FLIR pays $9.5 million to settle ‘world tour’ bribes

Image courtesy of Flir Systems Inc.FLIR Systems Inc. agreed Wednesday to pay the SEC about $9.5 million to settle FCPA offenses for funding a “world tour” by Saudi government officials who influenced decisions to buy FLIR products. 

Oregon-based FLIR earned more than $7 million in profits from the bribe-tainted sales, the SEC said.

The company makes thermal imaging, night vision, and infrared cameras and sensor systems.

In November, the SEC sanctioned two former employees in FLIR’s Dubai office for violating the FCPA.

Without admitting or denying the findings, Stephen Timms agreed to pay $50,000 to settle the SEC’s administrative enforcement action, and Yasser Ramahi agreed to pay $20,000.

The SEC said they organized what Timms referred to as a “world tour” by Saudi officials to help win business for the company. The two later created phony records to hide their offenses.

FLIR settled the SEC charges Wednesday through an out-of-court administrative proceeding. The company didn’t admit or deny the SEC’s findings

The SEC said FLIR had few internal controls over gifts and travel out of its foreign sales offices. 

“Two employees in its Dubai office provided expensive watches to government officials with the Saudi Arabia Ministry of Interior in 2009, and they arranged for the company to pay for a 20-night excursion by Saudi officials that included stops in Casablanca, Paris, Dubai, Beirut, and New York City,” the SEC said. 

From 2008 to 2010, FLIR paid about $40,000 for travel by Saudi government officials, the SEC said. There were multiple “New Year’s Eve trips to Dubai with airfare, hotel, and expensive dinners and drinks.”

The SEC found that FLIR violated the FCPA’s anti-bribery provisions, internal controls, and books-and-records provisions

FLIR self-reported the offenses and cooperated with the SEC’s investigation, the agency said.

In the settlement, FLIR agreed to disgorge $7,534,000 and pay prejudgment interest of $970,584. The SEC also assessed a $1 million penalty, for a total of $9,504,584.

“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,” Kara Brockmeyer, chief of the SEC’s FCPA unit, said in a statement Wednesday.

The SEC’s Release No. 74673 and Administrative Proceeding File No. 3-16478 In the Matter of
FLIR Systems, Inc.
(both dated April 8, 2015) are here (pdf).

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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