Faro Technologies Inc. (“Faro”), a U.S. corporation, began direct sales in China in 2003 through a subsidiary, Faro Shanghai Co., Ltd. (“Faro China”). In 2004 and 2005, the head of Faro China’s office made corrupt payments totaling $444,492, authorized by Faro’s then regional sales manager for the Asia-Pacific region, directly to employees of Chinese state-owned or controlled entities on several occasions. An additional $88,671 was promised but not paid. The payments were made to secure contracts for Faro worth approximately $4,944,234.
In 2005, the then regional sales manager and the Faro China employee decided to route the corrupt payments through an intermediary to “avoid exposure,” according to internal e-mails. In January 2005, Faro China entered into a false services contract with an intermediary. The intermediary would pay the bribes and send regular invoices to Faro China for payment.
Faro falsely recorded at least $238,000 in improper payments in its books and records, describing the bribe payments as “referral fees.” Between approximately May 2003 and February 2006, Faro also failed to devise and maintain a system of internal controls to ensure compliance with the FCPA.
