Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

U.S. v. UTStarcom, Inc.

 
:
UTStarcom, Inc.
:
DOJ Criminal
:
December 31, 2009
:
U.S. v. UTStarcom, Inc.
:
The DOJ's case focused upon travel to popular vacation locales that UTStarcom provided under the guise of "training" trips.

The company was permitted to "self-monitor" under the Non-Prosecution Agreement.
:
Telecommunications-Mobile
:
China
:
2001; 2002; 2003; 2004; 2005; 2006; 2007
:
Employees of Chinese government-owned telecommunications companies
:
UTStarcom, Inc. ("UTStarcom"), 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 provincial telecommunications companies in China.

Between 2002 and 2007, UTStarcom paid for more than 225 overseas "training" trips for employees of Chinese government-owned telecommunications companies. In actuality, the trips were primarily for sightseeing. UTStarcom arranged for the all-expense paid trips to destinations including Hawaii, Las Vegas, and New York to obtain and retain customer contracts and then improperly recorded the trips as training expenses.

In 2006, UTStarcom's audit committee began an internal investigation into the improper payments which eventually uncovered and disclosed the infractions.

On December 31, 2009, UTStarcom entered into a non-prosecution agreement with the DOJ, agreeing to pay a $1.5 million penalty, self-monitor and report periodically to the DOJ, and cooperate fully going forward.

In a complaint filed December 31, 2009, the SEC alleges corrupt conduct by UTStarcom in addition to the provision of travel detailed in the non-prosecution agreement with the DOJ. UTStarcom agreed to settle the SEC civil action related to the misconduct by paying another $1.5 million penalty and other sanctions.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Non-prosecution Agreement
:
Fine; implementation of rigorous internal controls; self-monitoring with periodic "compliance reports and certifications"
:
1,500,000
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
Not stated.
:
Cash, Entertainment, Gifts, Meals, Travel
:
Direct, Family Member, Subsidiary Company
:
7,000,000
:
China, United States
:
No