Settlements

ST-306
RAE Systems, Inc.
RAE Systems, Inc.
United States
Department of Justice
China
2010
12/10
Unknown
Legal Person
Criminal
Non-Prosecution Agreement
Criminal Fine
$1,700,000.00
$1,700,000
$0
Art.16, Art.26
Art. 1, Art. 2, Art. 8
Falsification of books and records, Internal controls violations
Falsification of books and records, Internal controls violations
Yes
According to the June 2011 United States Report to the OECD, "On December 10, 2010, RAE Systems, Inc. entered into a non-prosecution agreement with the Department of Justice regarding alleged violations of the books and records and internal controls provisions of the FCPA. On the same date, the SEC filed a settled civil complaint against RAE Systems in the U.S. District Court for the District of Columbia, charging the company with violations of the anti-bribery, books and records, and internal controls provisions of the FCPA. [ ] According to court records, from 2005 to 2008, the company had significant operations in the People's Republic of China (PRC), and sold its products and services primarily through two subsidiaries organized as joint ventures with local Chinese entities: RAE-KLH (Beijing) Co. Limited (RAE-KLH) and RAE Coal Mine Safety Instruments (Fushun) Co. Ltd. (RAE Fushun). A significant number of RAE-KLH's and RAE Fushun's customers were PRC government departments and bureaus, and large state-owned agencies and instrumentalities, including regional fire departments, emergency response departments and entities under the supervision of the provincial environmental agency. As described in the agreement [with the Department of Justice], RAE Systems accepted responsibility for violating the internal controls and books and records provisions of the FCPA arising from and related to improper benefits corruptly paid by employees of RAE-KLH and RAE Fushun to foreign officials in the PRC. As a result of due diligence conducted by RAE Systems before acquiring the majority of the joint venture that became known as RAE-KLH, RAE Systems was aware of improper commissions, kickbacks and "under table greasing to get deals" by employees." (Source: US Report to the Organisation for Economic Co-operation and Development, "Steps taken to implement and enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions," Information as of May 31, 2011, RAE Systems, Inc. Case Summary at 30-32.)