Securities and Exchange Commission
Litigation Release No. 17887 / December 10, 2002
Accounting and Auditing Enforcement
Release No. 1688 / December 10, 2002
SEC Obtains $500,000 Penalty Against Syncor International Corporation for Violating the Anti-Bribery Provisions of the Foreign Corrupt Practices Act
Securities and Exchange Commission v. Syncor International Corporation, Case No. 1:02CV02421 (U.S.D.C., D.D.C)
On December 10, 2002, the Commission filed two settled enforcement proceedings charging Syncor International Corporation, a radiopharmaceutical company based in Woodland Hills, California, with violating the Foreign Corrupt Practices Act (FCPA). First, the Commission filed a lawsuit in the United States District Court for the District of Columbia charging Syncor with violating the FCPA and seeking a civil penalty. Second, the Commission issued an administrative order finding that Syncor violated the anti-bribery, books-and-records, and internal-controls provisions of the FCPA, ordering Syncor to cease and desist from such violations, and requiring Syncor to retain an independent consultant to review and make recommendations concerning the company's FCPA compliance policies and procedures. Without admitting or denying the Commission's charges, Syncor consented to the entry of a final judgment in the federal lawsuit requiring it to pay a $500,000 civil penalty and consented to the Commission's issuance of its administrative order.
In both its federal court complaint and its administrative order, the Commission charged that, from at least the mid-1980s through at least September 2002, Syncor's foreign subsidiaries in Taiwan, Mexico, Belgium, Luxembourg, and France made a total of at least $600,000 in illicit payments to doctors employed by hospitals controlled by foreign authorities. According to the Commission, these illicit payments were made with the purpose and effect of influencing the doctors' decisions so that Syncor could obtain or retain business with them and the hospitals that employed them. The Commission charged, moreover, that the payments were made with the knowledge and approval of senior officers of the relevant Syncor subsidiaries, and in some cases with the knowledge and approval of Syncor's founder and chairman of the board.
According to the Commission, by making these payments through its subsidiaries, Syncor violated the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934). The Commission further charged that, by improperly recording these payments - and similar payments made to foreign persons not affiliated with government-owned facilities - Syncor violated the books-and-records provisions of the FCPA (Section 13(b)(2)(A) of the Securities Exchange Act of 1934). Finally, the Commission charged that, by failing to devise or maintain an effective system of internal controls to prevent or detect these violations of the FCPA, Syncor violated the internal accounting controls provisions of the FCPA (Section 13(b)(2)(B) of the Securities Exchange Act of 1934).
In determining to accept Syncor's settlement offer, the Commission considered the full cooperation that Syncor provided to the Commission staff during its investigation. The Commission also considered the fact that Syncor - after being alerted to the relevant conduct by another company that was conducting due diligence relating to a previously announced merger with Syncor - promptly brought this matter to the attention of the Commission's staff and the U.S. Department of Justice.
In a related proceeding, the United States Department of Justice filed criminal FCPA charges against Syncor Taiwan, Inc., a subsidiary of Syncor. (U.S. v. Syncor Taiwan, Inc. No. 02-CR-1244-ALL (C.D. Cal.)). In that proceeding, Syncor Taiwan has agreed to plead guilty to one count of violating the anti-bribery provisions of the FCPA and to pay a $2 million fine.
The Commission acknowledges the assistance of the Department of Justice in its investigation, which is continuing.
SEC Complaint in this matter