UTX United Technologies Corporation

By Samuel Rubenfeld and Micah Maidenberg 

United Technologies Corp. agreed to pay $13.9 million to settle U.S. allegations that it made illicit payments in its elevator and aircraft engine businesses.

The company made illicit payments for business in Azerbaijan and China, and provided trips and gifts to foreign officials in multiple countries, primarily in Asia, through two subsidiaries to get business, according to the Securities and Exchange Commission.

Such payments violate the Foreign Corrupt Practices Act, which bars the use of bribes to get or keep business. The law is jointly enforced by the SEC and the U.S. Justice Department.

United Technologies, which is based in Farmington, Conn., agreed to the $13.9 million penalty without admitting or denying the SEC's allegations.

A spokesman said the company was pleased to reach a final resolution with the SEC, and that it has taken steps -- including employee terminations, internal control enhancements and training programs -- "to reinforce that UTC is committed to doing business the right way."

United Technologies said in its most recent earnings statement, filed in July, that it had recorded an approximately $11 million charge in the second quarter to resolve the case. It also said in the July earnings report that the Justice Department told the company in March that it closed a related FCPA investigation without filing charges.

The Justice Department declined to comment.

The investigation dates back to 2013, and it involved two SEC subpoenas. The SEC's administrative order issued Wednesday detailed allegations of misconduct in several countries.

In Azerbaijan, United's Otis Elevator Co. subsidiary made unlawful payments to officials from 2012 to 2014 in order to sell elevator equipment for public housing in Baku, the capital, according to the agency.

An executive at Otis's Russia unit directed employees to pay two subcontractors $790,000, the SEC said. Those subcontractors subsequently made payments to officials overseeing elevator equipment procurement. In another occasion, a director at the Baku public housing procurement agency directed Otis's Russia unit to sell equipment to an intermediary at one price. Then, the intermediary would sell the equipment to the agency at a higher price, with the difference between the prices, at least $11.8 million, intended for the procurement officials, the SEC said.

In China, from 2009 until 2013, an aircraft joint venture that included United subsidiary Pratt & Whitney paid about $55 million in commissions to an agent who used some of the funds to make improper payments to Chinese airline officials in order to obtain confidential bidding information, according to the SEC. The venture including Pratt was competing for a contract with the Chinese airline.

The Otis Elevator China unit also was involved in a kickback scheme in 2012, the SEC said.

Meanwhile, employees at United Technologies frequently paid for leisure travel and entertainment for officials from countries including China, Kuwait, Pakistan and Indonesia while circumventing policies requiring legal department review of such spending.

The company booked more than $134,000 in improper travel and entertainment for foreign officials as legitimate business expenses, the SEC said.

Write to Samuel Rubenfeld at samuel.rubenfeld@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

September 12, 2018 14:32 ET (18:32 GMT)

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