The US Securities & Exchange Commission (SEC) alleges in an administrative proceeding that UTC from around 2012 until 2014, via its subsidiary Otis Elevator Company, made unlawful payments to Azerbaijan officials to facilitate the sales of elevator equipment.

Kickback scheme

According to the agency, improper payments were also made in connection with a kickback scheme to sell elevators in China in 2012. In addition, the SEC says UTC through International Aero Engines, a joint venture of UTC division Pratt & Whitney, made ‘unsupported payments’ to an agent from 2009 to 2013, ‘disregarding the high probability that at least some of the money would be used to make unlawful payments to a Chinese official to obtain confidential information to sell engines to a Chinese state-owned airline.’ From 2009 through 2015, UTC through Pratt & Whitney and Otis Elevator Company improperly provided trips and gifts to foreign officials in China, Kuwait, South Korea, Pakistan, Thailand and Indonesia in connection with its business.

Remedial acts

Tracy Price, deputy chief of the SEC enforcement division’s FCPA unit, said in a statement ‘US companies with global operations must implement policies and procedures that prevent bribery and motivate employees to perform ethically,’ and ‘issuers with weak internal accounting controls open the door to corruption and other financial misconduct.’ Under the settlement, UTC agrees, without admitting or denying wrongdoing, to pay roughly $9 million in disgorgement, $919,392 in interest and a $4 million civil penalty. The SEC took into account remedial acts UTC took promptly and co-operation it extended to agency officials. UTC self-reported the alleged misconduct and provided facts developed during its internal investigation. The company also strengthened its global compliance organization, and said they made changes which ‘included disciplinary action including employee terminations, enhancement of our internal controls, policies and compliance resources, and more robust training programs.’