A&O Shearman FCPA Digest | United States v. Maxwell Technologies, Inc. (S.D. Cal. 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”). Maxwell is a Delaware corporation that manufactures energy storage and power delivery products.

Influence to be Obtained
From at least July 2002 through May 2009, Maxwell S.A. paid more than $2,789,131 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 agent accomplished these payments by inflating purchase orders by 20%, then distributing the extra amount to officials at the state-owned entities and accounting 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, payments to the agent only increased upon discovery. Maxwell S.A. paid its Chinese agent approximately $165,000 in 2002 and increased the payments to the agent to nearly $1.1 million in 2008

Enforcement
On January 31, 2011, Maxwell entered into a three-year deferred prosecution agreement under which Maxwell agreed to pay an $8 million penalty and accept responsibility for violations of the FCPA’s anti-bribery and books and records provisions. In addition, Maxwell agreed to adopt an enhanced compliance program and internal controls to prevent future violations, to cooperate with the DOJ in ongoing investigations, and to report periodically to the DOJ concerning its compliance efforts. Maxwell also entered into a consent judgment in a related SEC action pursuant to which it agreed to pay $5.654 million in disgorgement of profits and $696,314 in prejudgment interest.