In the Matter of Stephen Timms & Yasser Ramahi (2014)
In the Matter of FLIR Systems, Inc. (2015)
Case Details
- Case Name
- In the Matter of Stephen Timms & Yasser Ramahi (2014)
In the Matter of FLIR Systems, Inc. (2015)
- Countries
- Egypt, Saudi Arabia
- Foreign Official
- Saudi Arabian Ministry of Interior officials; Egyptian Ministry of Defense officials.
- Date of Conduct
-
2008 to 2010
- Nature of Business
- FLIR Systems, Inc. is an Oregon-based defense contractor whose common stock is registered under Section 12(b) of the Exchange Act and is listed on the NASDAQ Global Select Market. FLIR markets and manufactures thermal imaging and other sensing products and systems, night vision, and infrared camera systems. Stephen Timms was FLIR’s Middle East Business Development Director and Yasser Ramahi was an employee in FLIR’s business development department.
- Influence to be Obtained
- According to the SEC, in 2008 FLIR entered into a contract with the Saudi Arabian Ministry of Interior (“MOI”) to sell thermal binoculars for approximately $12.9 million. As part of the sales agreement between FLIR and the MOI, FLIR agreed to conduct a “Factory Acceptance Test” that would be attended by MOI officials. FLIR allegedly believed that the successful execution of the contract, along with the “Factory Acceptance Test,” would lead to additional business with the MOI.
The Factory Acceptance Test was planned for July 2009 in Billerica, Massachusetts. However, in arranging the MOI officials’ travel, FLIR employees, Timms and Ramahi, allegedly organized a twenty-night trip with stops in Casablanca, Paris, Boston, New York, Beirut, and Dubai. Timms and Ramahi allegedly referred to the travel as the “World Tour.” According to the SEC, none of the stops, outside of Boston, served a business purpose. The SEC also contends that Timms and Ramahi gave expensive watches worth approximately $7,000 in total to five MOI officials and that FLIR paid for additional travel and entertainment expenses for MOI officials valued at approximately $40,000 from 2008 and 2010. After July 2009, the MOI placed additional orders with FLIR for binoculars for the price of $1.2 million. In total, FLIR earned revenues of over $7 million in profits in connection with its sale of binoculars to the MOI.
The SEC order states that in July 2009 FLIR’s finance department flagged Timms’ reimbursement request for the watches, and when questioned, Timms falsely stated that the report should have read the equivalent of 7,000 Saudi Riyal (approx. $1,900) instead of $7,000. At Timms’ request, Ramahi procured fabricated invoices stating that the watches were purchased for $1,900 by FLIR’s third-party agent. In September 2009, FLIR’s finance department contacted the third-party agent to confirm the value of the watches; however, unbeknownst to FLIR’s finance department, Timms drafted responses to FLIR’s questions on behalf of the agent to maintain that the watches cost approximately $1,900.
When questioned about the “World Tour,” Timms and Ramahi explained that the MOI had used FLIR’s travel department to arrange the travel and that FLIR’s travel department mistakenly charged FLIR instead of the MOI. To cover up the MOI’s travel expenses, Timms and Ramahi prepared additional false documentation that was submitted to FLIR’s finance department.
In addition to alleged payments made to MOI officials, the SEC claims that unspecified FLIR officials paid for $43,000 in travel costs for nine officials of the Egyptian Ministry of Defense to FLIR’s Stockholm factory, which also included a non-essential visit to Paris. In total, according to the SEC, the officials traveled fourteen days but only engaged in legitimate business activity on four days.
- Enforcement
- On November 17, 2014, the SEC announced that it settled charges against Timms and Ramahi for violations of the FCPA’s anti-bribery and books-and-records provisions. As part of the settlement, Timms agreed to pay a civil monetary penalty of $50,000 and Ramahi agreed to pay a civil monetary penalty of $20,000.
On April 8, 2015, the SEC announced that it settled charges against FLIR for violations of the FCPA’s books-and-records and internal controls provisions through an administrative proceeding. According to the cease-and-desist order, FLIR was required to pay $7,534,000 in disgorgement, $970,584 in prejudgment interest, and a $1,000,000 civil penalty—totaling $9,504,584
- Amount of the Value
- Not stated.
- Amount of Business Related to Payment
- Approximately $7 million in profits.
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 9,504,584
- Reporting Requirements
- Yes (1 Years)
- Total Combined Monetary Sanction
- $ 9,504,984
Defendants
Stephen Timms
- Citation
- In the Matter of Stephen Timms & Yasser Ramahi, Admin. Proc. File No. 3-16281 (Nov. 17, 2014);
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- $50,000
Yasser Ramahi
- Citation
- In the Matter of Stephen Timms & Yasser Ramahi, Admin. Proc. File No. 3-16281 (Nov. 17, 2014);
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- $20,000
FLIR Systems, Inc.
- Citation
- In the Matter of FLIR Systems, Inc., Admin. Proc. File No. 3-16478 (Apr. 8, 2015).
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- $9,504,584
