The US Securities and Exchange Commission (SEC) came down heavily on 3M for allegedly bribing officials of a Chinese hospital by sponsoring extravagant business trips for them. The regulatory body slapped a $6.5-million fine on the US conglomerate.
3M, which has business interests across industries like healthcare and consumer goods, ended up in the eye of the storm after boasting about its Chinese arm leveraging digital assets to reportedly enhance customer experience.
Announcing the fine over the alleged violations by 3M on August 25, 2023, the SEC has directed the company to cough up an additional $2 million in civil penalty.
Technically, 3M is not in trouble for using digital assets but for allegedly violating provisions of the Foreign Corrupt Practices Act (FCPA). The SEC has alleged that 3M’s Chinese arm had secretly financed foreign junkets for administrators of government-run hospitals and healthcare facilities in the Asian country.
As per SEC’s findings, these trips were not related to business conferences or visits to hospitals abroad. The regulatory watchdog has claimed that the officials were sent on vacations to exotic locations and influenced them to purchase medical products manufactured by 3M.
Between 2014 and 2017, the American firm paid for at least 24 such extravagant trips that set the company back by $1 million. During these lavish getaways, Chinese officials were allegedly treated to tours of private vineyards, spa treatments, hot air balloon rides, golf outings, and other high-end tourism activities.
According to reports, officials of 3M’s Chinese subsidiary reportedly worked in connivance with travel agencies in the country to prepare two sets of itineraries for each such trip. The first one would be a detailed one comprising conferences and hospital visits to get the required compliance work done. The other itinerary would include upscale tourist activities which would be given to officials secretly.
As per reports, the US firm reportedly transferred around $250,000 to a travel agency in China between 2016 and 2018 to make the required arrangements.
According to the SEC, 3M’s Chinese unit sent the alternate itineraries to hospital officials on WeChat or got them delivered personally to the latter. The hospital officials were asked to keep the “alternate itineraries” hidden and allegedly even faked internal compliance documents. While falsifying the documents, it was common for 3M employees to flat-out deny or omit mention of the tourist activities that they had planned during the foreign trips.
Further, 3M’s China unit also tracked how the junkets affected their bottom line, the commission said. In one of the cases, the 3M administration assessed the ROI for sending an official to an educational event by drawing comparisons between the sales figures of a government-owned healthcare facility before and after the trip, the SEC stated.
By falsifying the expenses, 3M has allegedly violated provisions of the FCPA which gives the SEC sweeping powers to crack down against cases of foreign bribery.
Meanwhile, 3M has neither accepted nor denied the allegations leveled by the SEC. In an emailed statement, 3M said that it has taken the required steps to address the alleged violations of its “company policy” and increased its “internal controls” to avoid such instances in the future.
Analysts are of the view that the SEC action against 3M is unlikely to have any impact on live cryptocurrency prices or the performance of the Top 10 cryptocurrencies.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
