UTStarcom agrees to pay $3M in fines to SEC, Justice

“UTStarcom spent millions of dollars on illegal bribes to win and keep customers in Asia,” Marc J. Fagel, director of the SEC’s San Francisco Regional Office, said in a release.

“It’s important for corporate America to recognize that resorting to these methods of boosting profits contributes to a culture of corruption that cannot be condoned under U.S. law.”

UTStarcom posted a notice on its website Thursday noting the agreement.

The SEC alleged that UTStarcom’s subsidiary in China paid nearly $7 million between 2002 and 2007 for hundreds of overseas trips by employees of Chinese government-controlled telecommunications companies who were customers of the California company. The trips were supposed to be for customer training, but the SEC alleged they were entirely or primarily for sightseeing.

It also said UTStarcom provided lavish gifts and all-expense paid executive training programs in the U.S. for existing and potential government customers in China and Thailand. It also provided visas to foreign government customers to work in the U.S. though the customers actually did not work for the company, the SEC alleged.

Finally, the SEC alleged that UTStarcom made “improper payments to sham consultants in China and Mongolia while knowing that they would pay bribes to foreign government officials.”

The SEC release said UTStarcom agreed, without admitting or denying the charges, to an entry of a permanent injunction against Foreign Corrupt Practices Act violations and to provide the SEC with annual FCPA compliance reports and certifications for four years, in addition to paying the penalty. 

UTStarcom sells telecommunications network equipment and handsets, and is focused on both emerging and established telecommunications markets around the world.