## Facts

- InVision Technologies, Inc. was a Delaware public company headquartered in California that manufactured airport explosives detection systems; its securities were registered under the Exchange Act and traded on NASDAQ.
- From at least June 2002 through June 2004, InVision conducted foreign sales through agents and distributors in China, the Philippines, and Thailand involving government-owned or government-controlled airport customers.
- In those transactions, InVision was aware of a high probability that intermediaries paid or offered things of value to foreign officials to obtain or retain business, yet InVision authorized payments to intermediaries or permitted transactions to proceed.
- China: InVision sold equipment through a distributor for approximately $2.8 million to a government-owned airport in Guangzhou; during export-delay issues, the distributor indicated it would provide travel and other benefits to officials, and InVision later paid the distributor $95,000 while recognizing about $589,000 in profit.
- Philippines: After a sale of equipment for a Philippine airport, InVision’s sales agent sought a commission and indicated part would be used for gifts or cash payments to officials to influence additional purchases; InVision agreed to pay the commission.
- Thailand: InVision pursued an airport project through an intermediary despite indications the intermediary could make improper payments.
- The SEC found InVision improperly recorded certain intermediary payments in its books and records and lacked adequate internal accounting controls over foreign sales and third-party relationships.
- InVision was acquired in December 2004 by a General Electric affiliate and became GE InVision, Inc., an indirect wholly owned subsidiary.

## Issues

1. Whether InVision violated Exchange Act § 30A (FCPA anti-bribery) by authorizing payments to intermediaries while aware of a high probability that the funds would be used to bribe foreign officials.
2. Whether InVision violated Exchange Act § 13(b)(2)(A) by failing to keep books and records that accurately and fairly reflected transactions and dispositions of assets relating to intermediary payments.
3. Whether InVision violated Exchange Act § 13(b)(2)(B) by failing to devise and maintain internal accounting controls sufficient to provide reasonable assurances of authorized, compliant foreign sales transactions.

## Decision

- The SEC instituted a cease-and-desist proceeding under Exchange Act § 21C and resolved the matter by accepting InVision’s settlement offer on a neither-admit-nor-deny basis (jurisdiction admitted).
- The SEC found violations of Exchange Act §§ 30A, 13(b)(2)(A), and 13(b)(2)(B).
- The SEC ordered InVision to cease and desist from committing or causing violations of those provisions.
- The SEC ordered disgorgement of $589,000 plus prejudgment interest of approximately $28,700 and imposed a $500,000 civil penalty (total approximately $1.1 million).
- The SEC required undertakings, including retention of an independent consultant and implementation of an FCPA compliance program designed to prevent and detect violations.

## Legal Principles

- An issuer may violate the FCPA anti-bribery provisions by using third-party intermediaries where it authorizes payments or continues transactions while aware of a high probability that funds will be used to provide improper benefits to foreign officials.
- The FCPA’s “knowledge” standard can be satisfied by awareness of a high probability of improper payments (including deliberate ignorance), not only by proof of direct payments by company personnel.
- Exchange Act § 13(b)(2)(A) requires issuers to maintain books and records that, in reasonable detail, accurately and fairly reflect transactions; mischaracterized or inadequately supported payments to intermediaries can violate this requirement.
- Exchange Act § 13(b)(2)(B) requires internal accounting controls that provide reasonable assurances that transactions are executed with management authorization; weak due diligence and oversight over agents and distributors in foreign sales can constitute an internal-controls violation.
- In SEC administrative FCPA resolutions, remedies may include cease-and-desist relief, disgorgement, civil penalties, and compliance undertakings such as independent reviews and program enhancements.

## Conclusion

The SEC concluded that InVision’s foreign sales practices—proceeding with intermediary relationships and payments despite awareness of a high probability of improper inducements to foreign officials—violated the FCPA’s anti-bribery, books-and-records, and internal-controls provisions, warranting a cease-and-desist order, monetary relief, and mandated compliance measures.


In re GE InVision, Inc., Exchange Act Release No. 51199, Admin. Proc. File No. 3-11827 (S.E.C. Feb. 14, 2005)