Monday, January 25, 2021

Plantronics to pay $36 million settlement, ending bribery investigation into new subsidiary

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Headset-maker Plantronics agreed to pay $36 million to settle a bribery investigation into Polycom, its recently acquired subsidiary.

From 2006 through at least July 2014, Polycom’s Vice President of China orchestrated a bribery scheme in which discounts given to its distributors were used to bribe Chinese government officials to secure business deals, according to U.S. Securities and Exchange Commission findings.

The scheme led to an estimated $10.7 million in profits for Polycom, which makes video and audio conferencing software.

The Dec. 26 settlement comes soon after Santa Cruz-based Plantronics acquired Polycom in a $2 billion deal in July.

All of the alleged misconduct happened prior to the acquisition, and prior to Polycom going private in 2016, according to a Plantronics news release.

Plantronics has agreed to pay $36 million as part of the settlement, according to the release.

“We are very pleased that the investigation into some of Polycom’s foreign operations has concluded,” Plantronics CEO Joe Burton said in the news release. “Plantronics has been, and remains, committed to operating with ethical and financial integrity, and we look forward to the future with Polycom.”

Investigators noted that Polycom self-reported the misconduct after an internal investigation and cooperated with the SEC.

The company fired eight employees and disciplined 18 others as a result of its own investigation.

Beginning in 2006, Polycom’s Vice President of China and other senior managers gave improper discounts to Chinese distributors, “knowing and intending” that the discounts would be used to pay off Chinese government officials in exchange for help securing orders for Polycom products, the SEC found.

The payments were recorded in a parallel deal-tracking and email system, separate from — and unknown to — the rest of the company, investigators found.

The SEC found Polycom violated the Securities and Exchange Act by falsely recording the payments as legitimate business expenses and by “failing to devise and maintain a sufficient system of internal accounting controls to detect and prevent the making of improper payments.”

Plantronics, which produces headsets and other audio equipment and is one of the largest employers in Santa Cruz County, has seen its stock prices slide substantially since hitting an all-time high of more than $82 a share early in July.

Its stock was trading at $32.65 when the market closed Friday, giving the company a market value of about $1.3 billion.

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