VimpelCom Resolves FCPA Violations for $795M
The U.S. Securities and Exchange Commission, the U.S. Department of Justice, and regulators in the Netherlands have arrived at a global settlement with VimpelCom Ltd. to resolve Foreign Corrupt Practices Act violations. The telecommunications provider purportedly committed the offenses in order win business in Uzbekistan.
According to the regulator, the company offered bribes to an Uzbek government official who was the relative of Uzbekistan’s President, just as VimpelCom entered that nation’s telecommunications market. VimpelCom needed government-issued licenses, channels, frequencies, and mobile blocks. At least $114M in bribes were funneled through an entity with ties to the official who was bribed, while about $500K was hidden under the guise of “charitable donations” that were also affiliated to the same official.
As a result of the alleged FCPA violations, said the SEC, the telecommunications company earned massive revenues in Uzbekistan. As part of the settlement, VimpelCom will pay $167.5M to the SEC, $130.1M to the DOJ, and $397.5M to Dutch regulators.
PTC Inc. is Accused of Bribing Chinese Officials to Win Business
PTC Inc. and its two Chinese subsidiaries (PTC-China) have consented to collectively pay $28M to resolve civil and criminal actions accusing them of violating the Foreign Corrupt Practices Act. According to the regulator, the two subsidiaries provided improper payments and non-business related travel to Chinese government officials to garner business. The SEC order, which institutes a settled administrative proceeding against the Massachusetts-based technology company, states that the two subsidiaries spent almost $1.5M on improper travel, entertainment, and gifts for the Chinese government officials who worked for state-owned entities that were customers of PTC. This purportedly made the company about $11.8M in profits from sales contracts with these entities.
These Chinese officials received their compensation either directly or via third-party agents for tourist and sightseeing activities. Such relational trips abroad to California, New York, Hawaii, and Las Vegas were organized abroad in conjunction with a trip to a PTC facility, usually one located in Massachusetts. One day of business would reportedly be accompanied by sightseeing that was not business-related. Improper gifts purportedly include electronic products, food, and clothing. Improper payments were allegedly concealed in company records and books to make them appear as if they were legitimate business expenses and commissions.
As part of the settlement, PTC will pay $11.8M in disgorgement and $1.7M in prejudgment interest. The two Chinese subsidiaries will pay a $14.54M fine as part of its non-prosecution deal, which was announced by the U.S. Justice Department.
Qualcomm Hired Chinese Officials’ Relatives to Win Business, Says SEC
Qualcomm Inc. has consented to pay $7.5M to resolve charges alleging FCPA violations. The company is accused of hiring the relatives of government officials in China to win or keep business there. These officials were responsible for deciding whether to choose Qualcomm’s mobile technology products.
Their relatives were purportedly offered paid internships and full-time employment. The SEC said that Qualcomm even gave a U.S. university a $75,000 research grant for the son of a foreign official so he could continue to stay in a PhD program and get his visa renewed. He also was later awarded an internship and permanent employment.
The same individual was sent on business to China, where he visited his family, even though some had expressed doubts about whether he was qualified to do the job. He also was reportedly given a $70,000 loan to purchase a house.
The regulator said that Qualcomm paid for entertainment, travel, and gifts for officials who worked at telecom companies that were owned by the Chinese government. The company purportedly misrepresented the improper payments in its books to make it appear as if these were legitimate business expenses. Qualcomm is settling without denying or admitting to the charges.