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Securities and Exchange Commission v. UTStarcom, Inc.

 
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UTStarcom, Inc.
:
SEC Civil
:
December 31, 2009
:
Securities and Exchange Commission v. UTStarcom, Inc.
:
SEC v. UTStarcom, Inc., No. 09-cv-6094 (N.D. Cal., Dec. 31, 2009)
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The SEC's investigation focused upon the vacations to popular locales UTStarcom had provided that masqueraded as "training" trips. In addition, the SEC also focused on fake job positions held by family members of Chinese government employees with UTStarcom that provided salaried pay.
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Telecommunications-Mobile
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China, Mongolia, Thailand
:
2001; 2002; 2003; 2004; 2005; 2006; 2007
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Employees of Chinese government-controlled telecommunications companies; employees of government customers in Thailand; Mongolian company with government connections.
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UTStarcom, Inc. (UTSI) settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint.

UTSI, a Delaware corporation, is a global telecommunications company that designs, manufactures, and sells network equipment and handsets. The majority of its operations are in China and it operates through its subsidiary UTStarcom China Co. Most of its sales were to government-controlled municipal and proincial telecommunications companies in China. Between the years 2002 and 2007, UTSI paid for more than 225 overseas "training" trips to employees of these companies that in actuality were primarily for sightseeing.

In addition, UTSI arranged for expensive gifts and all-expense paid executive training programs in the United States for existing and potential foreign government customers in China and Thailand. UTSI was also accused of providing employment benefits and salaries to employees of government customers or family members in China and Thailand.

Finally, UTSI made sham payments to a Mongolian consulting company for the purpose of bribing a Mongolian government official to help UTSI obtain a favorable ruling in a license dispute.

In 2006, UTSI's audit committee began an internal investigation into the improper payments which eventually uncovered and disclosed all of the infractions. In addition to the SEC settlement of $1.5 million, UTSI also paid an additional $1.5 million fine to the U.S. Dept. of Justice for a related criminal investigation.
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Civil penalty, Civil Settlement
:
Civil penalty; permanent injunction against FCPA violations and to provide the SEC with annual FCPA compliance reports and certifications for four years.
:
1,500,000
:
0
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Issuer
:
U.S.
:
Contract Procurement/Retention, License/Permit
:
Not stated.
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Cash, Entertainment, Gifts, Meals, Travel
:
Direct, Family Member, Subsidiary Company
:
8,723,000
:
China, Mongolia, Thailand, United States
:
No