Friday, June 6, 2008
The SEC instituted settled enforcement proceedings charging Faro Technologies, Inc. (Faro) with violations of the Foreign Corrupt Practices Act (FCPA) in connection with certain improper payments that Faro's Chinese subsidiary made to employees of Chinese state-owned companies in order to obtain or retain business. Faro develops, manufactures, markets, and supports software-based three-dimensional measurement devices. The Commission issued an administrative order finding that Faro violated the anti-bribery, books-and-records, and internal controls provisions of the FCPA. In the administrative order, the Commission ordered Faro to cease and desist from such violations, and to disgorge $1,411,306 in illegal profits, together with $439,637.72 in prejudgment interest. The Commission also required Faro to retain an independent consultant for a two year term to review and make recommendations concerning the company's FCPA compliance policies and procedures.
In the administrative order, the Commission found that, from 2004 through early 2006, Faro's Chinese subsidiary made a total of $444,492 in improper payments to employees of Chinese state-owned companies in order to obtain or retain sales contracts, from which Faro realized net profits of $1,411,306. The Commission found that a high level Faro executive, Faro's Director of Asia-Pacific Sales (the Sales Director), authorized employees of Faro's Chinese subsidiary to make the improper payments, including payments made through third-party intermediaries in order to avoid detection. The Commission also found that the Sales Director directed employees of Faro's Chinese subsidiary to alter account entries to conceal the true nature of the payments. In connection with the improper payments, Faro failed to make and keep accurate books and records, and failed to devise and maintain effective internal accounting controls.
In addition, in a separate non-prosecution agreement with the United States Department of Justice also announced today, Faro will pay a $1.1 million criminal penalty and agree to the same terms concerning the independent consultant.
The Commission considered the fact that Faro self-reported and promptly undertook remedial actions, as well as the cooperation it afforded the Commission staff in its investigation. (Rel. 34-57933; AAE Rel. 2836; File No. 3-13059)