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Semiconductor firm settles SEC bribery charges over China business

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Qualcomm Inc. has agreed to pay $7.5 million to settle Foreign Corrupt Practices Act charges that it hired the relatives of Chinese government officials who were deciding whether to select the company's mobile technology products, the U.S. Securities and Exchange Commission said Tuesday.

The San Diego-based semiconductor company said in a statement that the settlement relates to conduct prior to 2012, and that it has taken additional steps to enhance its existing controls and procedures.

The SEC said in the statement that Qualcomm also provided gifts, travel and entertainment to try to influence officials of government-owned telecom companies in China to select its products amid increasing competition in the international telecommunications market.

“With insufficient internal controls to detect improper payments, Qualcomm misrepresented in its books and records that the things of value provided to foreign officials were legitimate business expenses,” said the statement.

“Companies must effectively design and implement internal controls across all business operations to prevent FCPA violations, including its hiring practices,” Michele Wein Layne, director of the SEC's Los Angeles regional office, said in the statement. “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.”

Qualcomm said in its statement that it now closely monitors to determine if a job candidate has any relationship with an employee of a government agency or state agency, and “applies a stricter standard of scrutiny in an effort to avoid potential FCPA risks in the future.”

Don Rosenberg, Qualcomm's executive vice president and general counsel, said in the statement, “Qualcomm is pleased to have put this matter behind us. We remain committed to ethical conduct and compliance with all laws and regulations, and will continue to be vigilant about FCPA compliance.”

Experts have warned that the SEC's aggressive pursuit of even modest infractions of the Foreign Corrupt Practices Act can result in uninsurable legal costs in the millions of dollars.