Red Notice Newsletter - September 2016

ANTICORRUPTION DEVELOPMENTS

Former CEO of Harris Corporation's Chinese Subsidiary Pays $46,000 to Settle Alleged FCPA Violations; No Charges for Company

On September 13, 2016, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (the "Order") against Jun Ping Zhang ("Ping"), former chairman and CEO of Hunan CareFx Information Technology, LLC ("CareFx"). CareFx is a Chinese subsidiary of Harris Corporation, a U.S. developer of communications and information technologies. According to the Order, Ping directly or indirectly authorized the payment of between $200,000 and $1 million in improper gifts to government officials at Chinese state-owned hospitals in order to obtain or retain business worth approximately $9.6 million. CareFx employees then falsely recorded the improper payments as "entertainment," "office expenses" or "transportation." The Order required Ping to pay a civil penalty of $46,000 for violating the antibribery, books and records, and internal controls provisions of the Foreign Corrupt Practices Act (FCPA).

In 2013, Harris Corporation disclosed the potential violations to the DOJ and SEC shortly after acquiring CareFx and discovering the irregularities. The DOJ declined to charge Harris in November 2015. In its announcement of Ping's settlement, the SEC said that it too had decided to bring no action against Harris after "taking into consideration the company's efforts at self-policing that led to the discovery of Ping's misconduct shortly after the acquisition, prompt self-reporting, thorough remediation, and exemplary cooperation with the SEC's investigation."

For additional information, see coverage in FCPA Professor and the SEC press release and notice.

Cisco Receives SEC and DOJ Declinations Following FCPA Investigation

On September 8, 2016, in its Form 10-K, Cisco Systems Inc. announced that both the DOJ and SEC have declined to pursue FCPA enforcement actions against the company following more than two years of investigation into Cisco's operations in Russia and neighboring CIS countries. In December 2013, Cisco disclosed that the company was investigating its business activities and discounting practices in the region after Cisco and U.S. authorities received reports of misconduct. In its announcement, Cisco noted that it had fully cooperated with the DOJ and SEC and that Cisco had shared the results of its own investigation with the government.

For additional information, see coverage in The FCPA Blog.

Nu Skin U.S. Settles FCPA Enforcement Action Related to Charitable Donation in China

On September 20, 2016, Nu Skin Enterprises, Inc. ("Nu Skin U.S."), a Delaware corporation headquartered in Provo, Utah, reached an administrative settlement with the Securities and Exchange Commission ("SEC") in connection with allegations that the company's Chinese subsidiary ("Nu Skin China") violated the internal controls and books-and-records provisions of the FCPA .

According to the SEC's order, in 2013 Nu Skin China was under investigation by the local Administration of Industry and Commerce ("AIC") for improperly...