Samantha Barrett Badlam Comments on 3M’s $6.5-million SEC Resolution in Anti-Corruption Report

Litigation & enforcement partner Samantha Barrett Badlam spoke at length to Anti-Corruption Report about 3M’s agreement with the SEC to resolve charges it violated the internal accounting controls and books and records provisions of the FCPA. In the article, Samantha discusses key findings and important takeaways of the case for compliance practitioners.

According to Samantha, the role of travel agencies in China-based schemes is not new to the anti-corruption community.

Such was the case in 2020 with Herbalife China, 2019 with global telecom company Ericsson in 2016 when PTC Inc., paid nearly $30 million to resolve allegations of improper payments of cash, gifts, travel, etc. to Chinese government officials that were then improperly recorded in books and records.

“China has been cracking down on bribery and corruption over the last few years, resulting in a dramatic increase in the prosecution of individuals both receiving and making bribes,” said Samantha.

She also noted that companies with global operations need to have robust audit and monitoring practices in place. “In addition to traditional compliance monitoring and auditing efforts, such as onsite reviews and audit of payments, it is critical to utilize available data to track and flag payments in potentially high-risk areas through data analytics programs.”

Samantha recommended “companies have awareness of, and create policies that address, the specific compliance risks present in each country in which they operate. This includes policies and controls that specifically address common schemes of bribery and corruption in particular locations. Companies should also consider specific enhancements to their internal accounting controls environment, including accounting controls over cross-border fund transfers.”

When it comes to third-party engagements, Samantha said “companies need to have clear due diligence procedures that are risk-based and strictly enforced, and it’s important to have robust third-party onboarding diligence and ongoing monitoring and oversight of high-risk third parties who interact with, or assist in the interaction with, government officials. Travel agencies … would be classified as high risk and there should be robust due diligence performed prior to onboarding any such agent, including review and approval by compliance and legal.”