A San Diego-based manufacturer of energy-storage and other products agreed today to pay $8 million in penalties for bribing Chinese government officials to secure sales of its products.
A criminal information filed in U.S. District Court in San Diego charges Maxwell Technologies Inc. with one count each of violating the Foreign Corrupt Practices Act's anti-bribery and books-and-records provisions.
According to court documents, Maxwell's wholly owned subsidiary, Maxwell S.A., engaged a Chinese agent to sell Maxwell's products in China.
From at least July 2002 through May 2009, Maxwell S.A. paid more than $2.5 million to its Chinese agent to secure contracts with Chinese customers, including contracts for the sale of Maxwell's high-voltage capacitor products to state-owned manufacturers of electrical-utility infrastructure, according to court papers.
The agent in turn used Maxwell S.A.'s money to bribe officials at the state-owned entities in connection with the sales contracts, according to prosecutors.
Maxwell S.A. paid its Chinese agent about $165,000 in 2002 and increased the payments to the agent to $1.1 million in 2008, according to the U.S. government.
In its books and records, Maxwell mischaracterized the bribes as sales- commission expenses, according to prosecutors, who said Maxwell's U.S. management discovered the bribery scheme in late 2002.
Under terms of the agreement, the Department of Justice agreed to defer prosecution of Maxwell for three years.
Maxwell agreed, among other things, to implement an enhanced compliance program and internal controls capable of preventing and detecting FCPA violations, to report periodically to the DOJ concerning Maxwell's compliance efforts, and to cooperate with the DOJ in ongoing investigations.
If Maxwell abides by the terms of the deferred prosecution agreement, the DOJ will dismiss the criminal information when the term of the agreement expires.
Maxwell also reached a settlement of a related civil complaint filed by the Securities and Exchange Commission charging Maxwell with violating the FCPA's anti-bribery, books and records, internal controls and disclosure provisions.
As part of that settlement, Maxwell agreed to pay $5.654 million in disgorgement of profits and nearly $700,000 in prejudgment interest relating to those violations.
