United Technologies Corporation agreed Wednesday to pay the SEC $13.9 million to resolve charges that it violated the FCPA by making illicit payments in its elevator and aircraft engine businesses.
United Technologies subsidiary Otis Elevator Co. bribed Azerbaijani officials for public housing elevator sales in Baku, the SEC said.
Connecticut-based United Technologies, through a joint venture, also paid a Chinese sales agent in an attempt to obtain confidential information from a Chinese official to help win engine sales to state-owned Air China.
The SEC also said 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.
The gifts and trips were provided in an effort to retain business, according to the SEC.
United Technologies agreed to the SEC’s order (pdf) without admitting or denying the findings. The company agreed to disgorge $9 million plus interest of about $919,000, and pay a penalty of $4 million.
The SEC settled the case through an internal administrative order without going to court.
In Azerbaijan, the Otis Elevator unit hired agents from Russia without doing any due diligence.
“None of [the agents] had local experience in Azerbaijan or reliable experience in either import/export or the elevator industry,” the SEC order said.
“In fact, one of the intermediaries was not a registered entity until . . . well after participating in Otis’s transactions” in Azerbaijan.
In China, an agent for a joint venture that included Pratt & Whitney asked for and received “a commission advance of $2 million purportedly for an office expansion,” the SEC said. The agent didn’t provided any documentation to support its need for the advance.
The joint venture paid the China agent $55 million in commissions from 2009 to 2013.
In March, the DOJ notified United Technologies that it had decided to close its investigation into the matter, according to FCPA Tracker.
In late 2013 and early 2014, United Technologies self-disclosed to the DOJ, SEC, and the SFO the status of an internal investigation regarding a non-employee sales rep for the sale of jet engines and aftermarket services in China.
Harry Cassin is the managing editor of the FCPA Blog.