A&O Shearman FCPA Digest | SEC v. Maxwell Technologies Inc. (D.D.C. 2011)

Source Documents

Nature of Business
Marketing and sales of high-voltage capacitors to Chinese state-owned entities by Maxwell S.A., a wholly-owned Swiss subsidiary of Maxwell Technologies, Inc. (“Maxwell”), a Delaware corporation that manufactures energy storage and power delivery products.

Influence to be Obtained
Maxwell S.A. allegedly paid more than $2.5 million to a third‑party sales agent in China to secure sales contracts for high‑voltage capacitors with Chinese state‑owned manufacturers of electrical‑utility infrastructure. The complaint alleges that the agent accomplished these payments by inflating purchase orders by 20%, then distributing the extra amount to officials at the state‑owned entities. Maxwell accounted for these fees as commission expenses in Maxwell’s books and records. Maxwell’s U.S. management discovered the bribery scheme in late 2002. However, the bribery scheme continued until 2009, when it was reported to the company’s new CEO by a new sales director. The sales and profits from these contracts purportedly helped Maxwell offset losses that it incurred to develop new products now expected to become Maxwell’s future source of revenue growth.

Enforcement
Without admitting or denying the allegations in the SEC’s complaint, Maxwell consented to the entry of a final judgment on January 31, 2011 that permanently enjoins the company from future violations of the anti bribery, books and records, and internal control provisions of the FCPA. The judgment also ordered Maxwell to pay $5,654,576 in disgorgement and $696,314 in prejudgment interest and to undertake remediation and implementation of its FCPA compliance measures. Maxwell entered into a three year deferred prosecution agreement in a related criminal case brought by the DOJ and agreed to pay an $8 million penalty.