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Enforcement Action Dataset

 

Initiation Date:    09/12/2018  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:   

  • M. Shahriar Masud, SEC Headquarters
  • Tracy L. Price, SEC Headquarters
  • Ilana Z. Sultan, SEC Headquarters

Assisting Agencies:    U.S. Department of Justice , U.S. Postal Inspection Service

Type of Action:    SEC Administrative Proceeding

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

United Technologies Corporation ("UTC"), a Delaware corporation headquartered in Connecticut, made and sold high-technology products and services to the building systems and aerospace industries globally. UTC's stock was registed with the SEC and traded on the New York Stock Exchange.

Otis Elevator Company (“Otis”) was a wholly-owned subsidiary of UTC that manufactured and maintained elevators, escalators and moving walkways. Otis operated worldwide through a series of affiliated companies and joint ventures. Among those were Otis Russia, which was based in Russia and marketed to that country as well as other former Soviet countries, Otis China, which included two joint ventures majority owned by UTC, and Otis Kuwait, a joint venture majority owned by UTC.

Pratt & Whitney Company, Inc. (“Pratt”) was a subsidiary of UTC that made and serviced aircraft engines and auxiliary power units for commercial and military aircraft. Pratt’s financials are consolidated with those of UTC.

International Aero Engines (“IAE”) was a joint venture, founded in 1983 by five aerospace companies, including Pratt & Whitney. On June 29, 2012, Pratt & Whitney obtained a majority interest in IAE’s shares. IAE’s relevant financials were reported, and its books and records later consolidated, into UTC’s books and records

According to the documents in the case, between 2009 and 2015, UTC engaged in a series of schemes to improperly compensate foreign officials in a variety of countries in order to obtain business for the company. For example, from 2012 to 2014, UTC, through Otis, made unlawful payments to Azerbaijan officials to facilitate the sales of elevator equipment. Otis China also made improper payments in connection with a kickback scheme to sell elevators in China in 2012. From 2009 to 2013, UTC, through IAE, made payments to an agent, despite a significant risk that some of the money would be used to pay a Chinese official, to obtain confidential information in order to sell aircraft engines to a Chinese state-owned airline. Finally, from 2009 to 2015, UTC through both Pratt and Otis improperly provided leisure trips and entertainment inconnected from a business purpose to foreign officials in China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia in connection with its business.

In a settled administrative proceeding on September 12, 2018, the SEC issued a cease and desist order against UTC. Under the terms of the settlement, the SEC ordered UTC to cease and desist violations of the anti-bribery, books and records, and internal controls provisions of the FCPA, to pay disgorgement of $9,067,142 plus prejudgment interest $919,392, and to pay a civil penalty of $4 million. The SEC noted UTC's voluntary self-disclosure of the misconduct as well as the company's cooperation and remedial efforts.

Country(ies) involved:    Azerbaijan, China, Indonesia, Kuwait, Pakistan, South Korea, Thailand

Region(s) involved:    Asia-Pacific, Eastern Europe, Middle East

Total $ Sanctions Imposed by U.S. Government (FCPA-Related Charges Only):    $13,986,534

Sanction to Bribe Ratio:    Not Applicable

Sanction to Revenue Ratio:    Not Applicable

Sanction to Profit Ratio:    $13,986,534 / $9,000,000 = 155.41 %

FCPA Matter Name:   United Technologies Corporation's Involvement in Multiple Countries between 2009 and 2015 Information

Number of Related Enforcement Actions (Including This Enforcement Action):    1

Country(ies) involved:    Azerbaijan, China, Indonesia, Kuwait, Pakistan, South Korea, Thailand

Region(s) involved:    Asia-Pacific, Eastern Europe, Middle East

Total $ Bribery Payments:    Unknown

Total $ Revenue Generated from Bribery:    Unknown

Total $ Profit Earned or Expenses Avoided from Bribery:    $9,000,000

Total $ Sanctions Imposed by U.S. Government (FCPA-Related Charges Only):    $13,986,534

Sanction to Bribe Ratio:    Not Applicable

Sanction to Revenue Ratio:    Not Applicable

Sanction to Profit Ratio:    $13,986,534 / $9,000,000 = (155.41 %)

Name:    United Technologies Corporation

Entity Type:    Public Company

Place of Incorporation:    United States

HQ Country(ies):    United States

Industry:    Aerospace/Defense

FCPA Claims:    Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1) ; Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    None

Statutory Basis for FCPA Jurisdiction:    Issuer

Name:    IAE International Aero Engines AG

Entity Type:    Joint Venture

Place of Incorporation:    Switzerland

HQ Country:   

Industry:    Aerospace/Defense


Name:    Otis China

Entity Type:    Joint Venture

Place of Incorporation:    China

HQ Country:    China

Industry:    Industrial Goods


Name:    Otis Elevator Company

Entity Type:    Subsidiary

Place of Incorporation:    United States

HQ Country:    United States

Industry:    Industrial Goods


Name:    Otis Kuwait

Entity Type:    Joint Venture

Place of Incorporation:    Kuwait

HQ Country:    Kuwait

Industry:    Industrial Goods


Name:    Otis Russia

Entity Type:    Subsidiary

Place of Incorporation:    Russia

HQ Country:    Russia

Industry:    Industrial Goods


Name:    Pratt & Whitney Company, Inc.

Entity Type:    Subsidiary

Place of Incorporation:    United States

HQ Country:    United States

Industry:    Aerospace/Defense

Period of Bribery:   2009 - 2015

Total Bribery Payments:    Unknown

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    $9,000,000

Country(ies) involved:    Azerbaijan, China, Indonesia, Kuwait, Pakistan, South Korea, Thailand

Region(s) involved:    Asia-Pacific, Eastern Europe, Middle East

Officials Potentially Influenced (Name; Title; Organization): 

  • Name Unknown, Senior executives; Chinese state-owned airlines
  • Name Unknown, Official; Chinese state-owned bank
  • Name Unknown, Officials; Republic of Korea Air Force
  • Name Unknown, Officials; Chinese government
  • Name Unknown, Officials; Pakistani government
  • Name Unknown, Officials; Thai government
  • Name Unknown, Officials; Liftremont
  • Name Unknown, Officials; Indonesian government
  • Name Unknown, Officials; Kuwaiti government
  • Name Unknown, Senior purchasing official; Air China Limited

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    International Aero Engines - Joint Venture ; Otis China - Joint Venture ; Otis Elevator Company - Subsidiary ; Otis Kuwait - Joint Venture ; Otis Russia - Subsidiary ; Pratt & Whitney - Subsidiary

Third-Party Intermediary:   

  • Approved local distributor , Agent/Consultant/Broker
  • Chinese agent , Agent/Consultant/Broker
  • Sham subcontractors , Contractor/Sub-Contractor
  • Unapproved local distributor , Agent/Consultant/Broker
  • Unnamed intermediaries , Agent/Consultant/Broker

Type of Bribe:   Money, Non-Cash Gifts, Electronics/Computer Equipment, Travel/Lodging, Entertainment/Recreation

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Azerbaijan

Period of Bribery:   2012 – 2014

Total Bribery Payments:    $11,800,000

Total Revenue Generated from Bribery:    $14,600,000

Total Profit Earned or Expenses Avoided from Bribery:    Unknown

Country(ies) involved:    Azerbaijan

Region(s) involved:    Eastern Europe

Officials Potentially Influenced (Name; Title; Organization):  

  • Name Unknown, Officials; Liftremont;

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    Otis Elevator Company - Subsidiary ; Otis Russia - Subsidiary

Third Party Intermediary:    Sham subcontractors - Contractor/Sub-Contractor
Unnamed intermediaries - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in China

Period of Bribery:   2009 – 2013

Total Bribery Payments:    Unknown

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    Unknown

Country(ies) involved:    China

Region(s) involved:    Asia-Pacific

Officials Potentially Influenced (Name; Title; Organization):  

  • Name Unknown, Senior purchasing official; Air China Limited;
  • Name Unknown, Senior executives; Chinese state-owned airlines;
  • Name Unknown, Official; Chinese state-owned bank;

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    International Aero Engines - Joint Venture ; Otis China - Joint Venture ; Pratt & Whitney - Subsidiary

Third Party Intermediary:    Approved local distributor - Agent/Consultant/Broker
Chinese agent - Agent/Consultant/Broker
Unapproved local distributor - Agent/Consultant/Broker

Type of Bribe:   Money, Non-Cash Gifts, Electronics/Computer Equipment

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Leisure travel for officials from multiple countries

Period of Bribery:   2009 – 2015

Total Bribery Payments:    $134,000

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    Unknown

Country(ies) involved:    China, Indonesia, Kuwait, Pakistan, South Korea, Thailand

Region(s) involved:    Asia-Pacific, Middle East

Officials Potentially Influenced (Name; Title; Organization):  

  • Name Unknown, Officials; Republic of Korea Air Force;
  • Name Unknown, Officials; Chinese government;
  • Name Unknown, Officials; Pakistani government;
  • Name Unknown, Officials; Thai government;
  • Name Unknown, Officials; Indonesian government;
  • Name Unknown, Officials; Kuwaiti government;

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    Otis China - Joint Venture ; Otis Elevator Company - Subsidiary ; Otis Kuwait - Joint Venture ; Pratt & Whitney - Subsidiary

Third Party Intermediary:    None/Unknown

Type of Bribe:   Travel/Lodging, Entertainment/Recreation

Cash, Wire or Check:    Unknown

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes

Parent:    United Technologies Corporation

  • Subsidiary:  Otis Elevator Company

    • Percentage of Ownership:    100.00 %
    • Direct or Indirect Ownership:    Unknown
    • Parent Had Knowledge of Sub’s Bribery?:    No
    • Subsidiary Expressly Alleged to Be Parent's Agent:    No
    • Parent Liable for Sub Misconduct?:    Yes
  • Subsidiary:  Pratt & Whitney Company, Inc.

    • Percentage of Ownership:    Unknown
    • Direct or Indirect Ownership:    Unknown
    • Parent Had Knowledge of Sub’s Bribery?:    No
    • Subsidiary Expressly Alleged to Be Parent's Agent:    No
    • Parent Liable for Sub Misconduct?:    Yes

Parent:    Pratt & Whitney Company, Inc.

  • Subsidiary:  IAE International Aero Engines AG

    • Percentage of Ownership:   
    • Direct or Indirect Ownership:    Unknown
    • Parent Had Knowledge of Sub’s Bribery?:    No
    • Subsidiary Expressly Alleged to Be Parent's Agent:    No
    • Parent Liable for Sub Misconduct?:    Yes

Parent:    Otis Elevator Company

  • Subsidiary:  Otis Russia

    • Percentage of Ownership:    Unknown
    • Direct or Indirect Ownership:    Unknown
    • Parent Had Knowledge of Sub’s Bribery?:    No
    • Subsidiary Expressly Alleged to Be Parent's Agent:    No
    • Parent Liable for Sub Misconduct?:    Yes
  • Subsidiary:  Otis China

    • Percentage of Ownership:   
    • Direct or Indirect Ownership:    Unknown
    • Parent Had Knowledge of Sub’s Bribery?:    No
    • Subsidiary Expressly Alleged to Be Parent's Agent:    No
    • Parent Liable for Sub Misconduct?:    Yes
  • Subsidiary:  Otis Kuwait

    • Percentage of Ownership:   
    • Direct or Indirect Ownership:    Unknown
    • Parent Had Knowledge of Sub’s Bribery?:    No
    • Subsidiary Expressly Alleged to Be Parent's Agent:    No
    • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

Re: United Technologies Corporation

  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
United Technologies Corporation    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
United Technologies Corporation    

Total Global Monetary Sanctions (All Charges):    $13,986,534

Total Monetary Sanctions Imposed by U.S. Government (FCPA-Related Charges Only):    $13,986,534

Total Monetary Sanctions Owed to U.S. Government (FCPA-Related Charges Only):    $13,986,534

Case Status:    Resolved


Disposition:    Cease and Desist Order

Date of Disposition:    09/12/2018

United Technologies Corporation

—  Total Monetary Sanctions Imposed by U.S. Government for Defendant (FCPA-Related Charges Only):    $13,986,534

—  Compliance Obligation:    No

—  Reporting Obligation:    N/A

—  Admission of Guilt/Acceptance of Responsibility:    No

No Document Title Date Category