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In the Matter of Diagnostics Products Corporation

 
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DPC -- Diagnostics Products Corporation
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SEC Civil
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May 20, 2005
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In the Matter of Diagnostics Products Corporation
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In the Matter of Diagnostics Products Corporation, SEC Administrative Proceeding File No. 3-11933 (2005)
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In contrast to the treatment of the issuer in several apparently similar previous cases, where the issuer was only held accountable for books and records violations relating to improper payments by a subsidiary of which the issuer had no knowledge, the SEC in this matter charged DPC, the issuer, with having violated the anti-bribery, as well as books and records, provisions of the FCPA for the conduct of its subsidiary. However, the SEC Order states that DPC did not learn of the subject payments untl late 2002 and immediately terminated them. As such, the DOJ may have simply determined that the evidence addressing the territorial nexus required to prosecute a foreign person was too attenuated. In this case, the DOJ may have simply chosen to proceed under an alternative jurisdictional theory.

The disgorgement in this matter constitutes all of DPC's net profit in China during the relevant period.
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Healthcare-Hospitals
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China
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1991; 1992; 1993; 1994; 1995; 1996; 1997; 1998; 1999; 2000; 2001; 2002
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Chinese government officials working for Chinese government hospitals
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Diagnostics Products Corporation ("DPC"), a California corporation based in Los Angeles, sells medical diagnostic test systems and related kits through its subsidiaries, including Depu Biotechnological & Medical Products Inc. ("Tianjin") in Tianjin, China. From 1991 through 2002, DPC through Tianjin routinely made improper commission payments totaling approximately $1.6 million to the employees who controlled purchasing decisions in Chinese state-owned hospitals. When Tianjin's auditors raised certain Chinese tax issues related to the commission payments and the tax issues were reported to current DPC management, DPC instructed Tianjin to stop all commission payments. DPC also took remedial measures, revised its code of ethics and compliance procedures, and established a compliance program with respect to the FCPA.
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Compliance Monitor, Disgorgement, Injunction/Cease and desist
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This sanction consisted of: Disgorgement of $2,038,727 plus prejudgment interest of $749,895.
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2,788,622
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0
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Issuer
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U.S.
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Contract Procurement/Retention
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Not stated.
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Cash, Wire/check
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1,600,000
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China
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China
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No
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No