Network equipment maker UTStarcom will shell out $3 million in fines for bribing Chinese officials in order to land lucrative telecommunications contracts. The fine was the result of a settlement of an investigation conducted by the U.S. Department of Justice and Securities and Exchange Commission.
According to allegations by the DOJ and SEC, UTStarcom’s China branch spent almost $7 million between 2002 and 2007 on gifts and hundreds of trips abroad for executives of government-controlled telecom firms that were UTStarcom customers.
According to an agreement between UTStarcom and the U.S. government, UTStarcom arranged and paid for employees of Chinese state-owned telecom companies to travel to popular tourist destinations in the United States, including Hawaii, Las Vegas and New York City.
According to a statement from the U.S. Department of Justice, trips were then “falsely recorded … as ‘training’ expenses, while the true purpose for providing these trips was to obtain and retain lucrative telecommunications contracts.” UTStarcom has no training facilities in the travel destinations and conducted no training on the trips, according to the statement.
UTStarcom historically has focused on Asian markets, especially China. The company generally does business in China through its wholly-owned subsidiary, UTStarcom China Co. Ltd. (UTS-China).
UTStarcom has acknowledged wrongdoing by its China-based employees but has neither formally admitted nor denied the charges.
Filed Under: Industry regulations