Maxwell Technologies Inc. Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $8 Million Criminal Penalty
Enforcement Actions by DOJ and SEC Result in Penalties and Disgorgement of Approximately $13.65 Million
WASHINGTON – Maxwell Technologies Inc., a publicly-traded manufacturer of energy-storage and power-delivery products based in San Diego, has agreed to pay an $8 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for bribing Chinese government officials to secure sales of Maxwell’s products to state-owned manufacturers of electric-utility infrastructure in several Chinese provinces. The resolution was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Laura Duffy for the Southern District of California.
The department filed a deferred prosecution agreement and a criminal information against Maxwell in U.S. District Court for the Southern District of California today. The two-count information charges Maxwell with one count of violating the FCPA’s anti-bribery provisions and one count of violating the FCPA’s books-and-records provisions.
According to court documents, Maxwell’s wholly-owned Swiss subsidiary, Maxwell S.A., engaged a Chinese agent to sell Maxwell’s products in China. From at least July 2002 through May 2009, Maxwell S.A. paid more than $2.5 million to its Chinese agent to secure contracts with Chinese customers, including contracts for the sale of Maxwell’s high-voltage capacitor products to state-owned manufacturers of electrical-utility infrastructure. The agent in turn used Maxwell S.A.’s money to bribe officials at the state-owned entities in connection with the sales contracts. Maxwell S.A. paid its Chinese agent approximately $165,000 in 2002 and increased the payments to the agent to $1.1 million in 2008. In its books and records, Maxwell mischaracterized the bribes as sales-commission expenses. According to court documents, Maxwell’s U.S. management discovered the bribery scheme in late 2002.
Under the terms of the agreement, the department agreed to defer prosecution of Maxwell for three years. Maxwell agreed, among other things, to implement an enhanced compliance program and internal controls capable of preventing and detecting FCPA violations, to report periodically to the department concerning Maxwell’s compliance efforts, and to cooperate with the department in ongoing investigations. If Maxwell abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the term of the agreement expires. The agreement also acknowledges Maxwell’s voluntary disclosure of the FCPA violations to the Department of Justice and U.S. Securities and Exchange Commission (SEC).
Maxwell also reached a settlement of a related civil complaint filed by the SEC charging Maxwell with violating the FCPA’s anti-bribery, books and records, internal controls and disclosure provisions. As part of that settlement, Maxwell agreed to pay $5.654 million in disgorgement of profits and nearly $700,000 in prejudgment interest relating to those violations.
The criminal case is being prosecuted by Trial Attorney Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eric Beste of the Southern District of California. The investigation in this case, which is ongoing, is being assisted by the FBI’s San Diego Field Office. The department expresses its gratitude to the SEC for its significant assistance in this matter.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.