United Technologies Corporation and Foreign Corrupt Practices Act

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UTC Charged With Violating FCPA

Connecticut-based United Technologies Corporation has been charged by the Securities and Exchange Commission with violating the Foreign Corrupt Practices Act (FCPA). As a result, it will pay $13.9 million to resolve the FCPA charges for making illicit payments in its elevator and aircraft engine businesses.

Per the SEC’s order, United Technologies subsidiary Otis Elevator Co. made unlawful payments to Azerbaijani officials to facilitate the sales of elevator equipment for public housing in Baku.

Similarly, the SEC order said that United Technologies, through its joint venture, made payments to a Chinese sales agent. The payments pertained to a bid, wherein the firm sought to obtain confidential information from a Chinese official to assist the company in winning engine sales to a Chinese state-owned airline.

Additionally, the SEC’s order 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.

A Level Playing Field

“U.S. companies with global operations must implement policies and procedures that prevent bribery and motivate employees to perform ethically,” said Tracy Price, deputy chief of the SEC Enforcement Division’s FCPA Unit. “Issuers with weak internal accounting controls open the door to corruption and other financial misconduct.”

United Technologies 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. Finally, United Technologies has agreed to pay disgorgement of $9 million, plus interest of $919,000 and a penalty of $4 million.