UTStarcom Bribed Chinese Officials

(CN) - UTStarcom will pay a $1.5 million fine for bribing officials at state-owned telecommunications firms in China. Alameda, Calif.-based UTSI is a telecommunications company that designs, manufactures and sells network equipment and handsets.

The SEC claims the company violated the Foreign Corrupt Practices Act by providing travel and other things of value to foreign officials. UTSI specializes in Asian markets, particularly China, where it does business through its wholly owned subsidiary, UTStarcom China.

"UTSI has acknowledged responsibility for the actions of UTS-China and its employees and agents, who arranged and paid for employees of Chinese state-owned telecommunications companies to travel to popular tourist destinations in the United States, including Hawaii, Las Vegas and New York City," prosecutors said in a statement. "The trips were purportedly for individuals to participate in training at UTSI facilities."

But UTSI had no facilities there and conducted no training, though UTS-China recorded the trips as "training" expenses. The true purpose for the trips was to obtain and retain lucrative telecommunications contracts.

In addition to paying $1.5 million, UTSI agreed to implement internal controls and cooperate with the Justice Department. In exchange, the Department of Justice agreed not to prosecute UTSI or its subsidiaries for bribes, so long as UTSI satisfies its obligations under the agreement.

The SEC filed the case in San Francisco Federal Court.

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