Investing.com -- The U.S. Securities and Exchange Commissioned announced that Qualcomm Incorporated (O:QCOM) has agreed to pay $7.5 million to settle charges that it violated provisions of the Foreign Corrupt Practices Act by hiring relatives of government officials from China in an attempt to gain a competitive advantage in the international telecommunications market.
Through its investigation, the SEC determined that the San Diego-based semiconductor company also provided gifts, travel and other forms of entertainment as a way of influencing officials at a host of state-owned Chinese telecommunications companies. The SEC also charged that Qualcomm had faulty internal controls in place which failed to discover improper payments, while misrepresenting financial records by asserting that the offerings to the officials were legitimate business expenses.
Among the charges, Qualcomm provided full-time employment and paid internships to family members of Chinese officials, known as "must place" hires in an effort to secure business in the country. In one instance, the company provided a $75,000 research grant to a university in the U.S. on behalf of the son of a foreign official. In exchange, the son retained his position with the school's Ph. D program and was allowed to renew his visa, the SEC said.
Qualcomm later hired the son on a permanent basis, even after he received a poor evaluation in an initial interview when company representatives concluded that he would be a "drain on the teams he would join." Additionally, a Qualcomm executive also extended the official's son with a $70,000 loan to purchase a home, according to the SEC.
“Companies must effectively design and implement internal controls across all business operations to prevent FCPA violations, including its hiring practices,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. “For more than a decade, Qualcomm went to extraordinary lengths to gain a business advantage with foreign officials deciding between Qualcomm’s technology and its competitors.”
In a press release issued on Tuesday, Qualcomm noted that each of the charges documented in the case occurred as recently as four years ago.
“Qualcomm is pleased to have put this matter behind us,” Don Rosenberg, executive vice president and general counsel, said in a statement. "We remain committed to ethical conduct and compliance with all laws and regulations, and will continue to be vigilant about FCPA compliance.”
Shares in Qualcomm gained 0.22 or 0.42% to 52.33 in after-hours trading.