Qualcomm Charged With $7.5 Million For Breaching Foreign Corruption Practices Act

Qualcomm agrees to pay a fine of $7. 5 million to settle its dispute with the Securities and Exchange Commission.

Qualcomm has been bribing Chinese government officials for at least 10 years, recruiting their relatives, offering gifts, offering entertainment and travel to them, all to get favor from those capable of influencing contracts with state-controlled telecom companies, revealed Securities and Exchange Commission.

The SEC also stated in its books that Qualcomm used to misrepresent the goods offered to officials of the Chinese government as legal business expenses. On March 1, 2016, the commission revealed that Qualcomm has agreed to pay a sum of $7.5 million for settling charges that it violated the Foreign Corrupt Practices Act with its actions. The company didn’t deny or admit then charges.

The SEC investigation found a number of law breaches and settled afterwards. An example of such a breach is the hiring of an intern on a Chinese official’s request. The human resources department of the company emailed saying the intern was “a MUST PLACE” and the recruitment is “quite important from a customer relationship perspective.”

In another example, an executive of the chipmaker personally lent $70,000 to an official’s son to purchase a house. The company addressed the press by stating the settlement is related to the incidents that took place before 2012.

Qualcomm deals with a number of Chinese government issues in the past few years. In 2015, it agreed to disburse a fine of $975 million for settling an antitrust inquiry. The Chinese government was investigating the patent licensing operations of the company.

Qualcomm collects royalties on each smartphone for 4G and 3G cellular wireless technology. In the past years, many government agencies and businesses have often challenged the company on the prices charged by it for licensing its technology.

The licensing business of Qualcomm earns approximately two-thirds of its total profit, but contributes to just one-thirds of its sales revenue. The organization has sought closer relations with the Government of China by other means. Previously this year, it announced its partnership with Guizhou Province regional government in Southwest China to establish a joint project to promote and develop the forthcoming chips of Qualcomm in the state.

While this joint project will be established in Guizhou, many of the technical workers will work in Beijing. Qualcomm was also charged with giving a research grant of $75,000 to an American university on behalf of a foreign official’s son to help him retain his place in its Doctorate program. Such practices might injure the organization’s credibility.