![3M pays fine for sending Chinese officials on vacation 3M pays fine for sending Chinese officials on vacation](https://i0.wp.com/content.fortune.com/wp-content/uploads/2023/08/GettyImages-1220164327-e1693001186293.jpg?fit=%2C&ssl=1)
3M will pay more than $6.5 million to settle SEC charges that it tried to conceal the cost of sending Chinese government officials on overseas vacations and purchases.
The SEC alleges that 3M’s Chinese subsidiary spent $1 million to send officials of state-owned medical institutions and their spouses to cities in the United States and Australia. According to the order, the company paid for about 24 trips between 2014 and 2017, ostensibly to attend educational events.
The SEC said on Friday that employees of the Chinese subsidiary used private WeChat accounts to send “spare itineraries” or hand-delivered them to officials. They also required travelers to “hide agendas and falsify internal compliance documents to categorically deny and/or omit references to tourism activities planned as part of overseas travel,” the complaint said.
The SEC said 3M China employees tracked whether travel intermediaries benefited their profits. In one case, the subsidiary’s management tracked the “return on investment” of sending officials to educational events by comparing pre- and post-event sales figures with those of state-owned medical institutions, the order said.
The bogus payments are said to violate the Foreign Corrupt Practices Act, which gives the SEC sweeping powers to go after foreign bribery. 3M neither admitted nor denied the allegations.
3M cooperation
In an emailed statement, 3M said it was “committed to ethics and compliance in all aspects of its operations.” The company said it self-reported the activities soon after learning of the incidents and is cooperating fully with the SEC’s investigation.
“3M also took appropriate action to work with those involved to address the violation of company policy and strengthen our internal controls to help prevent similar situations in the future,” the company said.
The SEC said it considered 3M’s self-reporting and cooperation when calculating the fine.
Chinese government officials often do not speak English or receive adequate translation support, the SEC said. According to the SEC, the tours and other events took place in parallel with the educational events that the officials allegedly attended, although the officials skipped most of the events or never attended. In one instance, Chinese officials traveling to Chicago did not attend a dinner organized for them by 3M.
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