US firm fined for overseas bribery

5 January 2010

5 January 2010 | Jake Kanter

Telecoms equipment manufacturer UTStarcom (UTSI) will pay penalties totalling $3 million (£1.9 million) after bribing Chinese officials to win contracts.

UTSI will pay the Securities and Exchange Commission (SEC) – an organisation that protects US investors - $1.5 million (£934,548) in civil charges and an additional criminal fine of $1.5 million to the Department of Justice (DoJ).

The company has been fined for breaching the Foreign Corrupt Practices Act for providing travel and “other things of value” to employees of Chinese government-owned telecommunications firms.

According to the DoJ, UTSI’s Chinese subsidiary paid officials to travel to popular US tourist destinations, including Hawaii, Las Vegas and New York. The trips were disguised as training visits to UTSI facilities, but it was revealed the firm had no training capability in the locations and did not carry out such a service. Instead, the trips were used to secure and retain “lucrative” telecoms deals.

“UTStarcom spent millions of dollars on illegal bribes to win and keep customers in Asia,” said Marc Fagel, a director at the SEC.

“It is important for corporate America to recognise that resorting to these methods of boosting profits contributes to a culture of corruption that cannot be condoned under US law.”

UTSI will not be prosecuted because it volunteered information about the issue to the DoJ and conducted a thorough internal investigation. The company was unavailable for comment.

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