Maxwell, a Delaware corporation with its principal executive offices located in San Diego, California, develops, manufactures and markets energy storage and power delivery products (such as high-voltage capacitors). As a result of Maxwell’s international operations, the Company is subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits companies from making improper payments to foreign officials for the purpose of obtaining or keeping business.
According to the Department of Justice, Maxwell Technologies, paid almost $15m to settle both criminal and civil charges of giving bribes to win sales of its electric utility infrastructure to Chinese state-owned enterprises by inflating contract prices to cover the cost. Maxwell disclosed that an internal investigation had been conducted, and provided information and documents to the SEC and the DOJ, about “commissions” paid to a sales representative in connection with the sale of its products in China. As detailed by the Company, “these payments equaled the difference between the quoted price for certain products and the amount that the independent sales agent was able to sell such products to certain customers in China. These payments had previously been recorded as commissions; however, a portion of those payments may actually have been rebated directly or indirectly to customers” in violation of the FCPA. The Company has reported that it had accrued an initial amount of $9.3 million for the potential settlement of the regulatory investigations. As a result of this accrual the Company was forced to report a net loss of $10 million for its recently closed 4Q 2009. The Company has also stated that it estimates the settlement range for its FCPA violations and the resulting investigations to be between $10 – 20 million.
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