According to the SEC, Philips’ subsidiaries in China, cumulatively referred to in the order as Philips China, used special price discounts with distributors that created a risk that excessive distributor margins could be used to fund improper payments to government employees.

The SEC also found that employees, distributors, or sub-dealers of Philips’ subsidiaries in China engaged in improper conduct to influence hospital officials to draft technical specifications in public tenders to favour Philips’ products. For example, in one instance, a district sales manager at Philips China provided funds to a hospital director in return for the director’s assistance in the procurement process and, in another instance, Philips China's employees discussed tailoring technical specifications for a public tender with hospital directors so that only Philips China and two other manufacturers would qualify for the bid.

In addition, the SEC found that the employees, distributors, or sub-dealers engaged in improper bidding practices by preparing additional bids with other manufacturers’ products to create the appearance of legitimate public tenders and to meet the minimum bids requirement under Chinese public tender laws.

The SEC drew attention to the fact that, in 2013, Philips had been the subject of proceedings in relation to similar misconduct that took place in Poland between 1999 and 2007. On that occasion, Philips paid 4,515,178 in surrender of gains and interest. In that Order, Philips acknowledges that " the Commission is not imposing a civil penalty based upon its cooperation in a Commission investigation and related enforcement action."

The issues in Poland were identified by Philips which self-reported in 2010 after an internal investigation. There were arrests of some employees and healthcare officials. In 2009, three former employees of Philips Poland and 16 healthcare officials were prosecuted, in Poland, for corruption. When an audit failed to uncover improper payments, further investigations were conducted and the findings of that investigation supported the prosecutions and identified failures in Philips' record keeping and, in particular, that the payments to the officials were not properly accounted for. Internal controls were inadequate. In the SEC's Order, made by the SEC itself in administrative proceedings, there is this clause that is material to the current case:

Included in changes to internal controls, Philips established strict due diligence procedures related to the retention of third parties, formalised and centralised its contract administration system and enhanced its contract review process, and established a broad-based verification process related to contract payments. In addition, Philips has made significant revisions to its Global Business Principles
policies and continually revises the policies to keep them current and relevant. Philips also established and enhanced an anti-corruption training program that includes a certification process and a variety of training applications to ensure broad-based reach and effectiveness.

The conduct in China was between 2014 and 2019.

The SEC's jurisdiction arises because the company’s securities are listed on the Euronext Amsterdam stock exchange and as a foreign private issuer during the relevant period, Philips’ common stock was also registered with the Commission under Exchange Act Section 12(b) and publicly traded through a
secondary listing on the New York Stock Exchange (symbol: PHG). Philips files annual reports
on Form 20-F with the Commission.

The subsidiaries involved are Philips Electronics Hong Kong Ltd. and Philips (China) Investment Co., Ltd.,

The SEC acknowledges that there has been "ongoing remediation" and that "Philips undertook an internal investigation and regularly shared with Commission staff the facts developed in its inquiry, including facts previously unknown to the staff, and identified and voluntarily provided translations of key non-privileged documents."

Also, "Philips’ ongoing remediation has included: structural improvements to its policies and procedures; improving its tone at the top and the middle, with a focus on Philips China; increased accountability for enforcing compliance policies by its business leaders; highlighting compliance as a key component of ethical business practices; terminating or disciplining Philips China employees involved in the conduct described above; and terminating business relationships with distributors involved in the conduct described above. The company also improved its internal accounting controls relating to distributors, bidding practices, and the use of discounts and special pricing. Additionally, Philips has revised its compliance training."

Further, Philips has agreed to report to the Commission staff periodically during a two-year term, on the status of its ongoing remediation and implementation of compliance measures. The reports will focus particularly on due diligence on prospective and existing third-party consultants and vendors,
FCPA training and the testing of relevant controls, including the collection and analysis of compliance data. During this period, if Respondent discovers credible evidence, not already reported to Commission staff, that corrupt payments or corrupt transfers of value to a foreign official may have been offered, promised, paid, or authorized by Respondent, or any entity or person while acting on behalf of Respondent, or that related false books and records have been maintained, Respondent shall promptly report such conduct to the Commission.

This time there is a civil penalty (it's not a fine) of USD15 million plus surrender of profits of USD41,126,170 and prejudgment interest of USD6,047,633.