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News & Press: Foreign Corrupt Practices Act "FCPA"

U.S. Probes Motorola Solutions

Tuesday, September 27, 2011   (0 Comments)
Posted by: Wendy Wellman
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SEPTEMBER 27, 2011


By JOSEPH PALAZZOLO




U.S. authorities are investigating whether Motorola Solutions Inc. paid bribes to win business in Europe, people familiar with the matter said.

Justice Department and Securities and Exchange Commission officials have asked the company for information over the past two years about transactions in seven European countries.

The government is searching for evidence that Motorola Solutions—which makes two-way radios and systems for police, fire and other public-safety organizations—may have violated the Foreign Corrupt Practices Act, these people said.

The law bars American companies and their agents from offering bribes to foreign government officials.

A spokesman for Motorola Solutions, which is based in Schaumburg, Ill., declined to comment.

The investigation began in 2009 after the company opened its own internal investigation into possible breaches of antibribery laws and alerted U.S. authorities, according to the people familiar with the matter.

The internal probe initially focused on a suspicious transaction in Turkey, but U.S. authorities are concentrating on the company's dealings in Europe, said a person familiar with the matter.

Motorola Solutions hasn't received a subpoena and has been providing information to the SEC and Justice Department voluntarily, this person said.

Motorola Solutions became a standalone company in January when Motorola Inc. split in two. The other half of the company, Motorola Mobility Holdings Inc., which sells smartphones and set-top boxes, agreed in August to be acquired by Google Inc. for $12.5 billion.

Government sales accounted for about $5.1 billion, or two-thirds, of Motorola Solution's 2010 revenue, according to the company's annual report. European sales accounted for 16% of the company's $7.9 billion in revenue last year.

One line of inquiry in the U.S. probe concerns the company's business relationship with lobbyist Alfons Mensdorff-Pouilly, an Austrian count, people familiar with the matter said.

In 2010, British authorities charged Mr. Mensdorff-Pouilly in connection with a bribery investigation of defense contractor BAE Systems PLC. The lobbyist was accused of conspiring to make illicit payments on BAE's behalf to secure contracts for the sale of fighter jets in the Czech Republic, Hungary and Austria.

Mr. Mensdorff-Pouilly denied wrongdoing, and Britain's Serious Fraud Office dropped the charges against him in February 2010, following a settlement between the SFO, the U.S. Justice Department and BAE in which the company agreed to pay about $450 million.

As part of the settlement, BAE pleaded guilty to conspiring to make false statements to the U.S. government. In Britain, the company pleaded guilty to failing to keep accurate accounting records in connection with payments made in Tanzania.

A British court recently awarded Mr. Mensdorff-Pouilly €430,000 ($665,000) for the week he spent in custody in Britain, according to British news reports.

In the Motorola Solutions investigation, U.S. authorities are trying to determine whether Mr. Mensdorff-Pouilly, who lives in Austria, paid bribes to European officials on the company's behalf in order to win business, including a contract to upgrade Austria's emergency-services communications networks, the people familiar with the matter said.

Motorola Solutions and Alcatel-Lucent SA are part of a joint venture that initially won the contract in 2004.

Mr. Mensdorff-Pouilly's lawyer declined to comment. A spokeswoman for Austria's Interior Ministry, which made the award, declined to comment.

In recent years, the SEC and Justice Department have enforced the FCPA aggressively and have added staff in their antibribery units. The Justice Department brought 24 enforcement actions in 2010, up from five in 2004. Criminal fines in fiscal 2009 and 2010 combined totaled nearly $2 billion, up from about $11 million in 2004.

The U.S. government has previously targeted the telecommunications industry in corruption probes.

Alcatel-Lucent agreed last year to pay $137 million in penalties in settlements with the SEC and Justice Department over payments the company made in Costa Rica, Honduras, Malaysia and Taiwan to secure contracts.

In the settlement with the Justice Department, finalized in June, three Alcatel units pleaded guilty to violating the anti-bribery law, while the parent entered into a deferred prosecution agreement.

Alcatel neither admitted nor denied civil charges in its settlement with the SEC. A spokeswoman for Alcatel-Lucent declined to comment.

The existence of a U.S. probe was previously reported by the Austrian news magazine Profil.

—Greg Bensinger and Samuel Rubenfeld contributed to this article.

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