Philips Agrees to Pay $4.5 Million To End FCPA Lawsuit

By on April 26, 2013

Koninklijke Philips Electronics NV (PHG, PHIA.AE) announced that it will pay U.S. regulators $4.5 million to end an ongoing lawsuit with allegations of foreign bribery, the company said.

In February 2011 Philips informed the Securities and Exchange Commission and the Department of Justice of an internal investigation regarding allegations linked to an indictment given by Polish authorities in 2009 against three former employees of its subsidiary, Philips Polska sp. z.o.o., who participated in sales of medical equipment to Polish hospitals.

According to Polish prosecutors, individuals working for Philips gave bribes to hospital directors in an effort to convince them to purchase Philips’ equipment.

Additionally, Philips made proactive decisions to ramp up internal controls within the company to prevent similar illegal activities from happening in the future, a spokesperson for the company said.

Over the last few years, U.S. regulators have been cracking down on medical equipment companies that have violated the Foreign Corrupt Practices Act, which prevents companies from paying bribes to foreign officials to obtain or retain business.

Companies such as Eli Lilly & Co. (LLY) and Johnson and Johnson (JNJ) settled FCPA cases involving bribery payments to Polish officials.