On June 29, 2010, the Securities and Exchange Commission ("SEC") announced the filing of a settled enforcement action against Veraz Networks, Inc. ("Veraz"), a San Jose, California-based telecommunications company. The action alleged that Veraz violated the books and records and internal control provisions of the Foreign Corrupt Practices Act ("FCPA"), related to improper payments made to foreign government officials in China and Vietnam.
According to the filed Complaint, through 2007 and 2008, Veraz engaged a consultant in China that provided gifts and other things of value to officials at a Chinese government-controlled telecommunications company in order to win business contracts for Veraz. The gifts and other things of value totaled approximately $40,000. These items were described in internal emails as the "gift scheme." Similar conduct also occurred with regard to payment to the CEO of a government-controlled telecommunications company in Vietnam.
According to the Complaint, Veraz violated the books and records and internal control provisions of the FCPA by failing to accurately record the improper payments on its books and records, and by failing to devise and maintain a system of effective internal controls to prevent such payments. Without admitting or denying the allegations, Veraz consented to the entry of a final judgment permanently enjoining Veraz from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and ordering Veraz to pay a penalty of $300,000.
Without elaborating on its role, the SEC acknowledged the assistance of the U.S. Department of Homeland Security during the investigation. In November 2009, Veraz reported that it had spent $2.5 million to investigate and handle these FCPA compliance issues.