United Technologies Corporation (UTC) on Sept. 12 reached a $13.9 million settlement with the Securities and Exchange Commission to resolve charges that it violated the Foreign Corrupt Practices Act by making illicit payments in its elevator and aircraft engine businesses.
According to the SEC’s order, United Technologies subsidiary Otis Elevator made unlawful payments to Azerbaijani officials to facilitate the sales of elevator equipment for public housing in Baku and as part of a kickback scheme to sell elevators in China. The order also found that United Technologies, through its joint venture, made payments to a Chinese sales agent in a bid to obtain confidential information from a Chinese official that would help the company win engine sales to a Chinese state-owned airline.
The SEC’s order also found that United Technologies improperly provided trips and gifts to various foreign officials in China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia through its Pratt & Whitney division and Otis subsidiary in order to obtain business.
“U.S. companies with global operations must implement policies and procedures that prevent bribery and motivate employees to perform ethically,” Tracy Price, Deputy Chief of the SEC Enforcement Division’s FCPA Unit, said in a statement. “Issuers with weak internal accounting controls open the door to corruption and other financial misconduct.”
In determining to accept the offer, the Commission said it considered remedial acts promptly undertaken by UTC and its cooperation. UTC self-reported the misconduct and provided facts developed during its internal investigation. UTC also cooperated with the Commission investigation by producing documents, including key document binders and translations of key documents as needed, providing the facts developed in its internal investigation, and making current or former employees available to the Commission staff.
In addition, UTC provided information regarding its remedial efforts, including termination of employees and third parties responsible for the misconduct and enhancements to its internal accounting controls.
UTC consented to the SEC’s order without admitting or denying the findings that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Securities Exchange Act of 1934, and the company agreed to pay disgorgement of $9 million, plus interest of $919,392, and a penalty of $4 million.