POLITICAL RISKS AT A GLANCE

General Electric avoids 800,000$ fine through proper due diligence investigation prior to acquisition

In 2004, a due diligence investigation by General Electric prior to acquisition of airport scanner manufacturer InVision Technologies.inc revealed that the company had relied on a local brokerwhich had paid bribes to government officials and politicians in Thailand, China and the Philippines in return for contracts. To avoid criminal charges InVision Technologies cooperated with the Justice Department and Securities and Exchange Commission and was fined $800,000 for breach of the Foreign Corrupt Practices Act and forced to repay more than $600,000 in profits. Without a due diligence investigation GE would have been liable for its subsidiary’s actions in addition to facing large reputation damage.