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February 15, 2005 

GE InVision, Inc. Enters Into Settlement Agreement With SEC Over FCPA Violations

General Electric Company's (GE) recently acquired subsidiary, GE InVision, Inc., a manufacturer of explosive detection machines used in airports, has entered into a settlement agreement with the U.S. Securities and Exchange Commission (SEC) over improper payments to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA). In the settlement agreement, InVision agreed, without admitting or denying the charges, to disgorge $589,000 in profits from its FCPA violations plus prejudgment interest of approximately $28,700 and pay a $500,000 civil penalty. InVision was acquired in December 2004 by the General Electric Company and now operates under the name GE InVision, Inc. The alleged FCPA violations occurred prior to the acquisition and were disclosed by GE to the SEC and Justice Department after GE conducted an internal investigation following the receipt of an anonymous tip after the merger was announced.

In both a federal court complaint and an administrative order, the SEC charged that from at least June 2002 through June 2004, InVision employees, sales agents and distributors pursued transactions to sell explosive detection machines to airports in China, the Philippines and Thailand. Specifically, the SEC alleged that InVision paid an airport distributor in China $95,000 in 2003 knowing that part of the money would be used to pay for travel to the United States by Chinese government employees who worked at the airport. In return, InVision avoided a fine China had threatened to impose over the delivery of its machines and completed a sale for a $589,000 profit. The SEC also alleged that InVision knew about, and authorized, improper payments that its agents in the Philippines and Thailand were proposing to make to foreign officials. While the SEC did not have any evidence that the money was actually paid, offering such payments is a violation of the FCPA. The allegations concerning Thailand were related to InVision's $35 million sale of bomb detection equipment for Bangkok's new airport. The SEC alleged that InVision's Thai distributor had proposed offering political contributions to Thai officials to influence the award of the contract.

According to the SEC, in each of these transactions, InVision was aware of a high probability that its foreign sales agents or distributors made or offered to make improper payments to foreign government officials in order to obtain or retain business for InVision. Despite this, the SEC claimed that InVision allowed the agents or distributors to proceed on its behalf, in violation of the FCPA. The SEC also charged that InVision improperly accounted for certain payments to agents or distributors and failed to have an adequate system of internal controls to detect and prevent violations of the FCPA.

The SEC's administrative order found that InVision violated the anti-bribery, books and records and internal controls provisions of the FCPA (Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934). Without admitting or denying liability or the SEC's findings, InVision agreed to pay disgorgement and prejudgment interest, cease and desist from violations of the FCPA, and comply with its undertakings to retain an independent consultant to ensure that InVision adheres to a corporate compliance program designed to detect and prevent violations of the FCPA. In the Justice Department proceedings that were settled in December 2004, InVision agreed to settle the same charges and pay a civil penalty of $800,000.

As a result of these alleged FCPA violations, InVision has paid the U.S. Government a total of $1,917,700 (representing $1,328,700 in civil penalties and interest and $589,000 in disgorged profits).



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