U.S. fines Qualcomm for hiring relatives of China officials: SEC

(Reuters) - Qualcomm Inc has agreed to pay $7.5 million to settle charges it violated U.S. anti-bribery laws by hiring relatives of Chinese officials to obtain business, the U.S. Securities and Exchange Commission said on Tuesday.

People walk past Qualcomm's stand during the Mobile World Congress in Barcelona, Spain February 24, 2016. REUTERS/Albert Gea

The Chinese officials related to Qualcomm’s new hires were deciding whether to select the company’s mobile technology products amid growing competition in the global telecommunications market, the SEC said.

The conduct, which included offering jobs to some individuals who fell short of hiring standards at the San Diego-based telecommunications company, occurred between 2002 and 2012, the SEC said.

Qualcomm, which neither admitted nor denied the SEC’s findings, had previously disclosed the SEC probe, the company said in a statement. Qualcomm has taken additional steps to enhance its existing internal controls and procedures, it said.

The case is part of an SEC crackdown involving the hiring of “princelings,” the term used in Asia to refer to the children or younger relatives of China’s political leaders or top executives at state-owned enterprises. The practice could potentially violate U.S. anti-bribery laws.

HSBC, Europe’s biggest lender, disclosed on Feb. 22 that the SEC was also investigating its hiring practices in Asia. The SEC had also opened a probe into JPMorgan in 2013 regarding the hiring of princelings.

Improper hiring by Qualcomm included a situation in 2010, when a manager at a Chinese state-owned telecommunications company asked Qualcomm employees to find an internship at Qualcomm for her daughter. A Qualcomm employee noted the girl’s parents gave “great help” for Qualcomm’s business development, the SEC said in a settlement.

In another instance, Qualcomm gave financial support to the son of an executive at another state-owned company through a $75,000 research grant to an American university where he studied. The measure allowed the son to renew his student visa and retain his position in a PhD program.

The Chinese executive’s son was later a Qualcomm intern and then permanently employed, despite being deemed a “no hire” after company interviews.

A Qualcomm executive later personally loaned the employee $70,000 to buy a home.

Qualcomm now closely monitors employment referrals to determine if candidates have relationships with employees of state-owned entities or government, the company said. It applies a stricter scrutiny to avoid potential future anti-bribery law risks, the company said.

The SEC also found that Qualcomm provided gifts, travel, and entertainment to try to influence officials at government-owned telecom companies in China.

Qualcomm lacked sufficient internal controls to detect those payments and misrepresented them in the company’s books and records as legitimate business expenses, the SEC said.

Reporting by Suzanne Barlyn; Editing by David Gregorio and Chris Reese