Qualcomm Inc. said March 1 that it settled alleged violations of the Foreign Corrupt Practices Act with the U.S. Securities and Exchange Commission and agreed to pay a civil penalty of $7.5 million.
Qualcomm (Nasdaq: QCOM) settled the matter with the SEC without admitting or denying the federal agency’s findings. The issue was an SEC matter and not a criminal action, Qualcomm said in a statement, noting that the Justice Department recently closed an investigation on the matter without taking any action.
Qualcomm reported the investigation to shareholders in April 2014.
In a cease-and-desist order issued on March 1, the SEC said that from at least 2002 until 2012, Qualcomm provided things of value to try to influence Chinese government officials to make regulatory decisions that would expand the use of Qualcomm-developed technology in China. Additionally, the SEC order said the business tried to influence executives at two companies to adopt Qualcomm-developed technology and expedite deployment of Qualcomm’s CDMA and WCDMA networks once the Chinese government issued the proper licenses. CDMA refers to Qualcomm’s signature technology, Code Division Multiple Access.
The SEC document further states that Qualcomm offered or provided full-time employment and paid internships to family members of officials and other referrals of officials, often at the request of the foreign officials and when the family members did not meet Qualcomm’s normal hiring criteria.
The SEC document alleges that Qualcomm gave gifts to foreign officials, including airline tickets and hospitality packages at major sporting events. In one case, the company offered “lavish hospitality packages worth approximately $95,000 per couple for the 2008 Beijing Olympics.” The SEC document said the invitations related to the Beijing Olympics were rescinded after a member of Qualcomm’s finance staff raised concerns about “FCPA issues” — that is, possible violations of the Foreign Corrupt Practices Act.
The commission alleged that Qualcomm failed to keep proper records of gifts and did not have proper internal controls related to the matters. The SEC ordered Qualcomm to fix its record keeping and to update agency officials on the matter at least every nine months until the spring of 2018.
Qualcomm is not the first San Diego technology company to run into potential violations of the FCPA.