1. SEC Charges Maxwell Technologies for Long-Running Bribery Scheme in China; 2011-31; Jan. 31, 2011
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SEC Charges Maxwell Technologies for Long-Running
Bribery Scheme in China
FOR IMMEDIATE RELEASE
2011-31
Washington, D.C., Jan. 31, 2011 — The Securities and Exchange
Commission today charged energy-related products manufacturer Maxwell
Technologies Inc. with violating the Foreign Corrupt Practices Act (FCPA) by
repeatedly paying bribes to government officials in China to obtain business
from several Chinese state-owned entities.
Additional Materials
SEC Complaint
Litigation Release No. 21832
The SEC alleges that a Maxwell subsidiary paid more than $2.5 million in
bribes to Chinese officials through a third-party sales agent from 2002 to
May 2009. As a result, the subsidiary was awarded contracts that generated
more than $15 million in revenues and $5.6 million in profits for Maxwell.
These sales and profits helped Maxwell offset losses that it incurred to
develop new products now expected to become Maxwell's future source of
revenue growth.
Maxwell — a Delaware corporation headquartered in San Diego — has
agreed to pay more than $6.3 million to settle the SEC's charges. In a
related criminal proceeding, Maxwell has reached a settlement with the U.S.
Department of Justice and agreed to pay an $8 million penalty.
"Maxwell's bribery allowed the company to obtain revenue and better
financially position itself until new products were commercially developed
and sold," said Cheryl J. Scarboro, Chief of the SEC's Foreign Corrupt
Practices Act Unit. "This enforcement action shows that corruption can
constitute disclosure violations as well as violations of other securities laws."
According to the SEC's complaint filed in U.S. District Court for the District
of Columbia, Maxwell's wholly-owned Swiss subsidiary Maxwell Technologies
SA paid the bribes to officials at several Chinese state-owned entities. The
bribes were classified in invoices as either "Extra Amount" or "Special
Arrangement" fees, and were made to improperly influence decisions by
foreign officials to assist Maxwell in obtaining and retaining sales contracts
for high voltage capacitors produced by Maxwell SA.
The SEC's complaint alleges that the illicit payments were made with the
knowledge and tacit approval of certain former Maxwell officials. For
example, former management at Maxwell knew of the bribery scheme in
late 2002 when an employee indicated in an e-mail that a payment made in
connection with a sale in China appeared to be "a kick-back, pay-off, bribe,
whatever you want to call it, . . . . in violation of US trade laws." A U.S.-
based Maxwell executive replied that "this is a well know[n] issue" and he
warned "[n]o more e-mails please."
The SEC alleges that Maxwell failed to devise and maintain an effective
http://www.sec.gov/news/press/2011/2011-31.htm[28-12-2011 20:11:07]

2. SEC Charges Maxwell Technologies for Long-Running Bribery Scheme in China; 2011-31; Jan. 31, 2011
system of internal controls and improperly recorded the bribes on its books.
The illicit sales and profits from the bribery scheme helped Maxwell offset
losses that it incurred to develop its new products. Maxwell made
corrections in its Form 10-Q filing for the quarter ended March 31, 2009.
Without admitting or denying the allegations in the SEC's complaint,
Maxwell consented to the entry of a final judgment that permanently
enjoins the company from future violations of Sections 30A, 13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, orders
the company to pay $5,654,576 in disgorgement and $696,314 in
prejudgment interest under a payment plan. The company also is required
to comply with certain undertakings regarding its FCPA compliance program.
Maxwell cooperated in the investigation.
Tracy L. Price and James Valentino of the SEC Enforcement Division's FCPA
Unit conducted the investigation. The Commission acknowledges the
assistance of the Department of Justice's Criminal Division-Fraud Section in
its investigation, which is continuing.
# # #
For more information about this enforcement action, contact:
Cheryl J. Scarboro,
Chief, Foreign Corrupt Practices Act Unit, SEC Division of Enforcement
202-551-4403
http://www.sec.gov/news/press/2011/2011-31.htm
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