3M Probes Potential Antibribery Violations -- WSJ

By Austen Hufford and Dylan Tokar

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 27, 2019).

3M Co. said it was conducting an internal investigation into possible violations of U.S. anticorruption laws after discovering suspect travel and record-keeping related to marketing its products in China.

The company said in a financial filing on Friday that it had retained outside counsel and a forensic accounting firm to help conduct the investigation. 3M said it disclosed the investigation to the Justice Department and the Securities and Exchange Commission on July 23.

"We have high expectations of all our employees and business partners, and expect that our business dealings are done in compliance with the law," 3M said in a statement.

The Justice Department and the SEC declined to comment.

Shares in 3M fell 2.3% to $173.98 Friday.

3M said the possible violations of the Foreign Corrupt Practices Act were made by business groups based in China.

The FCPA prohibits bribes to foreign government officials by companies listed on a U.S. stock exchange or with other ties to the U.S.

It isn't 3M's first brush with the U.S. anticorruption law. In 2009, the company contacted the Justice Department and SEC to disclose a prior internal probe into reports of bid-rigging and bribery by a subsidiary in Turkey.

The government investigations remained open for over three years, until U.S. authorities in 2013 said they were closing their probes without taking an enforcement action.

The Justice Department cited 3M's voluntary disclosure of the issue, cooperation and steps it had taken to enhance its anticorruption compliance program, according to a securities filing at the time.

The Justice Department and the SEC have traditionally been more lenient with companies that self-disclose potential legal issues and cooperate with prosecutors. In 2016, the department launched a program that gives companies that disclose FCPA violations up to a 50% discount off a fine, or a pass on prosecution, under certain circumstances.

3M's public disclosure came one day after the company reported a second-straight quarter of declining sales in China. The company made 11% of its sales in China last year. 3M has operated in China since 1984 and says it was the first foreign-owned company to operate outside a special development zone for foreign firms.The St. Paul, Minn.-based company sells an array of its products in China from coatings for cars to face masks that people wear to protect themselves from air pollution.

Write to Austen Hufford at austen.hufford@wsj.com and Dylan Tokar at dylan.tokar@wsj.com

(END) Dow Jones Newswires

July 27, 2019 02:47 ET (06:47 GMT)

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