U.S. chip maker Qualcomm is set to settle charges amounting to $7.5 million with the U.S. Securities and Exchange Commission (SEC) over allegations that it offered jobs to relatives of Chinese officials to influence the selection of its products, according to an article published on www.pcworld.com.
The report said that the SEC investigation also found that Qualcomm tried to influence officials at government-owned telecom companies in China by allegedly giving gifts, travel and entertainment.
In addition, the SEC said that Qualcomm misrepresented the expenses in its books by recording the valuable things provided to the officials as legitimate business expenses.
A statement released by the SEC on Tuesday, March 1, said that although the chip company neither denied nor accepted the charges, Qualcomm has agreed to pay $7.5 million to the SEC to settle charges that it violated the Foreign Corrupt Practices Act (FCPA).
Qualcomm, however, made a clarification, saying that the settlement relates to a case before 2012 and the SEC action was not criminal in nature.
The Department of Justice recently closed its investigation on these matters without taking any action, the report said.
The charges against Qualcomm show the challenges faced by U.S. companies in various markets with strong government control, where bribing is acceptable. SEC had also investigated some financial institutions related to similar charges and their operations in China.
The report said that the chip company gave full-time employment and paid internships to officials' family members to obtain or retain business in China. SEC also cited an instance where the company obliged to the request of an official who asked Qualcomm employees to find an internship for her daughter studying in the U.S., acknowledging that her parents "gave us great help for Q.C. new business development."
Further, SEC said that the company also provided a $75,000 research grant to a university in the U.S. on behalf of the son of a foreign official to retain his position in its Ph.D. program and renew his student visa.
The children or younger relatives of top Chinese government and public sector officials given these favors were often referred to as "princeling," a term often used to suggest the importance or rank of the official and also the extent of favor that the company was willing to provide to win him over.
According to SEC, Qualcomm eventually hired the official's son as an intern and later made him a permanent employee. He was also sent on a business trip to China, to visit his parents during the Chinese New Year. SEC added that this was done despite a "no hire" decision after an initial interview for permanent employment since the official's son did not "meet the minimum requirements for moving forward with an offer." A Qualcomm executive also personally provided the son of the official with a $70,000 loan to buy a home.
Don Rosenberg, Qualcomm's executive vice president and general counsel, said in a statement that the company is "pleased to have put this matter behind us," adding that it remains "committed to ethical conduct and compliance with all laws and regulations, and will continue to be vigilant about FCPA compliance."
The report said that the U.S. company had previously encountered regulatory problems in China. In February last year, Qualcomm agreed to pay a fine of about $975 million as part of a broader settlement with China's National Development and Reform Commission, over violations of the country's anti-monopoly law.
Earlier this year, Qualcomm announced the setting up of Guizhou Huaxintong Semi-Conductor Technology, a server chipset design and sales joint venture, with the provincial government of Guizhou holding a majority stake. Qualcomm said it wants to take advantage of partnerships with local companies to gain easier access to the local market.