Tech company to pay $28 million to resolve U.S. bribery probesPosted On: Feb. 16, 2016 12:00 AM CST
(Reuters) — Two units of Massachusetts-based software company PTC Inc. will pay a total of $28 million to resolve probes into whether they gave more than $1 million in recreational travel to officials from China, two U.S. government agencies said on Tuesday.
The Department of Justice and the Securities and Exchange Commission announced settlements with PTC to resolve possible bribery charges under the U.S. Foreign Corrupt Practices Act, a 1970s law that bars bribes to foreign government officials, the Justice Department said in a statement.
PTC put “extensive remedial measures” in place because of the cases, including terminating employees involved and launching a compliance program in the units in China, the company said in a statement. PTC set aside funds for the penalties in 2015, it said.
PTC admitted in its settlement with the Justice Department that two of its units in Shanghai and Hong Kong, through local business partners, arranged and paid for employees of various Chinese state-owned enterprises to travel to the United States.
The trips, which occurred from around 2006 to 2011, were purportedly for training at PTC’s Needham, Massachusetts, headquarters but were mostly for recreational excursions, including to New York, Los Angeles, Las Vegas and Hawaii, the department and the SEC said in statements.
PTC’s Shanghai and Hong Kong units paid more than $1 million to fund trips while entering into contracts worth more than $13 million with the Chinese state-owned entities, the department said.
PTC will pay the department $14.5 million in a deal that spares the company from possible prosecution, the department said. In its SEC settlement, PTC agreed to return $11.9 million in profits it earned through the improper conduct and pay $1.8 million in interest, the SEC said.
During the trips, Chinese officials typically visited PTC’s Massachusetts headquarters for a day and then enjoyed leisure activities, including sightseeing and golfing, the SEC said. Employees of PTC’s Chinese units also gave improper gifts to the Chinese officials, including cell phones, iPods and gift cards, the SEC said.
The improper payments were disguised as legitimate commissions or business expenses in company books and records, the SEC said.
The commission also entered into an agreement with Yu Kai Yuan, an employee at one of the PTC overseas units, which defers possible civil bribery charges against him for three years because he cooperated with the agency’s investigation, the SEC said.
Mr. Yuan’s lawyer could not immediately be reached for comment.