SEC: Sending Saudi Officials on 'World Tour' Was FCPA Violation

In case there was any ambiguity that companies may not send foreign government officials on a "world tour" in order to secure business, the SEC made that clear yesterday. In an administrative proceeding filed yesterday, the SEC sanctioned two former employees in the Dubai office of U.S.-based FLIR Systems Inc. for violating the FCPA via such conduct.

According to the SEC, Stephen Timms and Yasser Ramahi, who worked in sales at FLIR Systems Inc., were seeking to sell FLIR’s security cameras and binoculars to Saudi Arabia. The SEC claims that Timms and Ramahi first provided five Saudi Arabian officials with expensive luxury watches during meetings, and then later arranged for a number of key officials

to embark on what Timms referred to as a “world tour” of personal travel before and after they visited FLIR’s Boston facilities for a factory equipment inspection that was a key condition to fulfillment of the contract.  The officials traveled for 20 nights with stops in Casablanca, Paris, Dubai, Beirut, and New York City.  

The SEC alleges that there was no business purpose for the various travel stops beyond Boston, and that FLIR improperly paid for all of the airfare and hotel accommodations. On top of that, the SEC alleges that Timms and Ramahilater later falsified records in an attempt to hide their misconduct when these reimbursements were questioned by FLIR Systems' finance department. According to the SEC, Timms and Ramahi's negotiations ultimately resulted in the Saudi Arabian government purchasing approximately $30 million worth of FLIR Systems's binoculars and cameras.  

The SEC’s order finds Timms and Ramahi violated the FCPA and the internal controls and false records provisions of Section 13(b)(5) and Rule 13b2-1 of the Exchange Act; and caused FLIR’s violations of the books and records provisions of Section 13(b)(2)(A) of the Exchange Act. Timms and Ramahi consented to the order (without admitting or denying the findings) and agreed to pay financial penalties of $50,000 and $20,000, respectively.