UTStarcom has entered into an agreement with United States government agencies, agreeing to pay a combined USD3 million in penalties and fines for bribes in China.
According to the United States Department of Justice, UTStarcom will first pay a USD1.5 million fine for violations of the U.S. Foreign Corrupt Practices Act. The fine is because UTStarcom was providing travel and other things of value to foreign officials, specifically employees at state-owned telecommunications firms in China. UTStarcom reportedly accounted for those trips as training-related expenses. Along with the financial penalty, the company will implement rigorous internal controls and cooperate fully with the Department of Justice.
Though UTStarcom is incorporated in the United States, the company generally does business in China through its wholly-owned subsidiary, UTStarcom China Company Ltd. As described in the agreement, the company has acknowledged responsibility for the actions of its Chinese firm 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.
UTStarcom also reached a settlement with the U.S. Securities and Exchange Commission under which it agreed to pay an additional USD1.5 million penalty and satisfy additional obligations for a period of four years.