Maxwell Technologies Inc., a San Diego-based maker of energy storage and power delivery products, agreed to pay $14.3 million in penalties, disgorgement of profits and interest to settle charges related to the bribing of Chinese government officials to win sales of Maxwell’s products, said federal prosecutors and the company Jan. 31.
According to a Department of Justice announcement citing court documents, Maxwell was charged with two criminal counts, one count of violating federal anti-bribery laws, and one count of violating record keeping related to the bribes.
The company agreed to pay $8 million in criminal penalties related to the DOJ charges; and $6.35 million to settle a civil case by the Securities and Exchange Commission, including some $5.65 million in disgorgement of profits, and nearly $700,000 in prejudgment interest.
According to court documents, Maxwell’s wholly owned Swiss subsidiary, Maxwell S.A., engaged a Chinese agent to sell its products in China. From July 2002 to May 2009, the subsidiary paid more than $2.5 million to the agent to secure contracts with Chinese customers including state-owned manufacturers.
The agent used Maxwell’s money “to bribe officials at the state-owned entities in connection with the sales contracts,” according to the DOJ announcement. “In its books and records, Maxwell mischaracterized the bribes as sales commission expenses.”
The DOJ stated that Maxwell’s U.S. management discovered the bribery scheme in late 2002.
Maxwell issued a press statement Jan. 31, acknowledging the settlement and the terms of the penalty payments. It said if the company complies with the terms of the DOJ agreement the charges will be dismissed with prejudice. Maxwell said it must periodically report to both the DOJ and the SEC on its internal compliance program concerning anti-bribery.
In early 2010, Maxwell stated it was negotiating with both the DOJ and SEC over charges it had engaged in bribery in China, and later in 2010 said it was nearing a settlement in the case.
— Mike Allen