Agilent's odd FCPA situation
In a 10-Q filing, Agilent has informed the world that it has embarked on an internal investigation aimed at possible FCPA infractions in its China operations. The company has duly hired outside counsel to lead the probe, which the company says was sparked by a routine audit that had found employees of its Chinese subsidiaries had violated the company's ethics standards. The investigation apparently centers on the sale of Agilent testing products through "third party intermediaries" in China.
The company has also briefed the U.S. Department of Justice and the SEC as to its preliminary findings.
It sounds like a textbook case of a company taking all the right steps to minimize the fallout from any FCPA lapses. Companies that proactively report violations and subsequently undertake an aggressive investigation often win lenient treatment from prosecutors.
But the Agilent case is complicated a bit by the fact that the issues were not necessarily new. Earlier, this year, the media in China was abuzz with reports that Agilent was at the center of a tawdry scandal involving the state-owned oil Sinopec. The giant company recently "launched an investigation into allegations that one of its officials accepted escort services as a bribe by a supplier"---that would be Agilent--- which then "won a lucrative contract for a project worth 18 billion yuan (HK$22 billion) in Wuhan," according to a blog in the South China Mornings Post.
"The scandal involves US-listed technology company Agilent Technologies, which had been accused of bribing" an executive "with sex service provided by male sex workers in a high-end Beijing club, said media reports…. Agilent had secretly videotaped Zhang, reports said. It later threatened her with the tape when the company competed for a big contract to sell machines to Sinopec for an 18-billion-yuan plant to produce petrochemical ethylene in Hubei province's Wuhan. Zhang then worked with Agilent and helped it to win, said reports."
This sounds like sensationalistic coverage. That said, Agilent certainly has a lot on its hands.