In re UNITED TECHNOLOGIES

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 84087 / September 12, 2018 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-18745 
 
In the Matter of 
 
UNITED TECHNOLOGIES 
CORPORATION,  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against United Technologies Corporation (“UTC” or 
“Respondent”).  
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.    

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III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
SUMMARY 
 
1. These proceedings arise from violations of the Foreign Corrupt Practices Act of 
1977 (the “FCPA”) [15 U.S.C. 78dd] by Respondent United Technologies Corporation (“UTC”), a 
building systems and aerospace company with operations around the world.   
 
2. From approximately 2012 through 2014, UTC, through Otis Elevator Company, 
made unlawful payments to Azerbaijan officials to facilitate the sales of elevator equipment.  
Improper payments were also made in connection with a kickback scheme to sell elevators in 
China in 2012.  In addition, from 2009 to 2013, UTC, through International Aero Engines, a joint 
venture of Pratt & Whitney, a division of UTC, made unsupported payments to an agent, 
disregarding the high probability that at least some of the money would be used to make unlawful 
payments to a Chinese official to obtain confidential information to sell engines to a Chinese state-
owned airline.  Finally, from 2009 through 2015, UTC through Pratt & Whitney and Otis Elevator 
Company improperly provided trips and gifts to various foreign officials in China, Kuwait, South 
Korea, Pakistan, Thailand, and Indonesia in connection with its business.  UTC obtained a benefit 
of over $9 million from the conduct. 
 
3. With regard to these various schemes, UTC failed to accurately and fairly record 
the transactions in its books and records and failed to devise and maintain a sufficient system of 
internal accounting controls. 
 
RESPONDENT 
 
4. United Technologies Corporation is a Delaware corporation that was founded in 
1934 and is headquartered in Farmington, Connecticut.  UTC designs, manufactures and markets 
high-technology products and services to the building systems and aerospace industries worldwide.  
UTC stock is registered under Section 12(b) of the Exchange Act, and it is traded on the New York 
Stock Exchange under the symbol “UTX.” 
 
OTHER RELEVANT ENTITIES 
 
5. Otis Elevator Company (“Otis”), a wholly-owned subsidiary of UTC, 
manufactures and maintains elevators, escalators and moving walkways, and operates worldwide 
through a series of affiliated companies and joint ventures.  These include “Otis Russia,” its 
manufacturing and sales operations based in St. Petersburg and Moscow that market to Russia and 
CIS countries; “Otis China,” its operations in China that include two joint ventures majority-owned 
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding.   
 

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by UTC; and “Otis Kuwait,” comprised of a joint venture in which UTC had majority ownership.  
Otis’s financials are consolidated with those of UTC. 
 
6. Pratt & Whitney (“Pratt”) is an operating division of UTC that is headquartered in 
East Hartford, Connecticut.  Pratt designs, manufactures, and services aircraft engines and 
auxiliary power units for commercial and military aircraft.  Pratt’s financials are consolidated with 
those of UTC.   
 
7. International Aero Engines (“IAE”) is a joint venture, founded in 1983 by five 
aerospace companies, including Pratt & Whitney.  It designs, manufactures, and services engines 
for single-aisle, commercial aircraft with an office in East Harford, Connecticut.  On June 29, 
2012, Pratt & Whitney obtained a majority interest in IAE’s shares.  IAE’s relevant financials were 
reported, and its books and records later consolidated, into UTC’s books and records. 
 
FACTS 
 
Russian and Azerbaijani Improper Payment Scheme 
 
8. In 2012, the Azerbaijan government began to upgrade the elevators in public 
housing in Baku.  Otis engaged in various schemes to sell Otis elevator equipment to Baku 
Liftremont, a municipal entity, responsible for procuring and maintaining the elevators in Baku’s 
public housing.  The schemes involved the use of sham subcontractors and intermediaries to make 
improper payments to Liftremont officials.   
 
9. The first scheme in March 2012 was in connection with a direct sale from Otis 
Russia to Liftremont of elevator equipment valued at $1.8 million.  At the direction of the Chief 
Operations Officer, the scheme was facilitated through the use of two subcontractors that were 
used to make payments to Liftremont officials.  No due diligence was performed on the 
subcontractors, and they were paid over $790,000, which represented nearly 44% of the total 
contract value.  No meaningful review was conducted on the contracts with the subcontractors, and 
payments to the subcontractors were made without appropriate documentation of services being 
provided.  
 
10. Between February 2013 and December 2014, Otis sought to win additional 
contracts from Liftremont.  At the direction of a Liftremont Senior Official, Otis Russia involved 
four different intermediaries which acted as conduits to make improper payments in order to secure 
nine contracts from Liftremont.  In each instance, Otis Russia sold elevator equipment to the 
intermediary at one price, knowing that the intermediary would sell the equipment to Liftremont at 
a significantly higher price.  The spread between the prices, at least $11.8 million, was intended in 
part for Liftremont officials. 
 
11. Despite a corporate policy that required it, no due diligence was performed on the 
intermediaries, which were small entities registered in either Russia or Estonia.  None of them had 
local experience in Azerbaijan or reliable experience in either import/export or the elevator 

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industry.  In fact, one of the intermediaries was not a registered entity until February 2014, well 
after participating in Otis’s transactions with Liftremont in 2013.   
 
12. The transactions with the intermediaries should have raised significant red flags 
because Otis Russia already had an approved joint venture (“JV”) partner that was authorized to 
make the sales in Azerbaijan, and no legitimate business justification was provided for using the 
four intermediaries instead. 
 
13. At the direction of the Otis Russia Sales and Business Development Manager 
(“Manager”), Otis Russia staff drafted the contracts between Otis Russia and the intermediaries, as 
well as the contracts between the intermediaries and Liftremont reflecting payment terms.  In 
several instances, the Liftremont Senior Official was copied on emails reflecting the contractual 
payments and shipping arrangements with the intermediaries.  All payments to the intermediaries, 
from Liftremont or from other intermediaries, were in U.S. dollar denominations and involved U.S. 
correspondent banks. 
 
14. On multiple contracts, at the direction of the Liftremont Senior Official, Otis Russia 
staff arranged the transportation of the elevator equipment sold to the intermediaries and prepared 
the customs paperwork to facilitate the intermediaries’ transportation of the equipment across 
borders and into Azerbaijan.  Otis Russia directed monies to countries outside of Russia or 
Azerbaijan.  For example, email traffic in November 2013 among the Liftremont Senior Official 
and Otis regional managers referenced a “Turkey balance” of TRY 214,126. (approximately 
$104,465) followed by a statement that “It’s good for now, [the Liftremont Senior Official] calmed 
down.” 
 
15. The scheme also involved allowing Liftremont officials to use Otis Russia signature 
stamps to falsify documents.  For example, the Otis Russia Manager emailed the Liftremont Senior 
Official and his assistant an electronic image of the stamp of an Otis Russia branch and the 
signature of the head of the company.  In the email, the Manager wrote that the assistant could 
prepare a certificate and apply the official Otis stamp and signature. 
 
16. The transactions with the intermediaries did not follow normal procedures, yet 
between 2012 and 2014, Legal, Finance, and business employees all failed to prevent the improper 
transactions.  Before the contracts were executed, Legal personnel merely confirmed that the 
contracts contained standard terms.  No reviewer sought to confirm that the intermediaries had 
undergone due diligence as required by Otis policies or inquired about contractual terms that 
showed that the intermediaries were acting as distributors.  Further, there was no review of the 
financing structure that would have identified the pricing differentials that generated excess funds 
intended for Liftremont officials. 
 
17. Other methods were also used to funnel improper payments to Liftremont officials.  
In one scheme, Liftremont was made a distributor so that certain Liftremont officials could receive 
additional monies from the sale of Otis elevator equipment and services.  The Otis Regional 
President negotiated the distributorship agreement with the Liftremont Senior Official.  In May-
June 2013, Otis Legal, Finance, and business employees at the local and regional levels and the 

 5 
Otis Regional President approved using Liftremont as a distributor for municipal and government 
elevator projects in Azerbaijan despite numerous red flags, including the fact that Liftremont was 
the government entity responsible for the selection of the supplier for Baku municipal and 
government projects.  The Liftremont distributorship agreement was finalized and executed but not 
implemented. 
 
18. Otis’s JV partner that sold Otis elevators in the Baku market raised numerous 
concerns about improper transactions between Otis and Liftremont.  Otis selected Liftremont as its 
distributor for a Baku municipal elevator project instead of the JV partner, which led to the 
Managing Director of the JV raising concerns with the Otis Regional President.  The Managing 
Director told the Regional President that he should look into the Liftremont contracts because they 
did not comply with “the rules.”  Between July and September 2013, the Managing Director 
emailed the Regional President eight times to request a confidential meeting regarding the 
Liftremont contracts.  Instead, the Regional President forwarded the Managing Director’s emails to 
lower-level Otis Russia staff involved in the Liftremont contracts and took no steps to look into the 
concerns or to elevate those concerns. 
 
19. In the summer of 2014, Otis ignored additional red flags when the Liftremont 
Senior Official instructed Otis Russia to replace one intermediary with a new intermediary.  Otis 
Russia staff drafted a contract with the new intermediary for the sale and circulated it for review.   
 
20. In September 2014, the head of the Otis Russia Legal Department (“Russia 
lawyer”) initially refused to approve the contract and requested information about the ownership of 
the new intermediary and a written explanation from Liftremont as to why it needed the 
intermediary.  In October 2014, the Russia lawyer elevated the issue to his supervisor, the head of 
Otis’s Regional Legal Department (“Regional lawyer”), who contacted the CFO of Otis Russia 
(“Russia CFO”), and engaged in an extended discussion about whether Legal, Finance, or Security 
had responsibility for screening customers and intermediaries. 
 
21. Ultimately, in December 2014, the Russia lawyer gave the Regional lawyer a letter 
from the Liftremont Senior Official containing a perfunctory explanation for why Liftremont 
needed the new intermediary inserted into the contract.  Although the Regional lawyer initially 
challenged the perfunctory explanation, he ultimately approved the contract.  However, the 
intermediary had already entered into a contract with Otis Russia for the Liftremont business four 
months earlier, in August 2014. 
 
22. As a result of the schemes, the intermediaries obtained at least $11.8 million, some 
of which was intended for Liftremont officials so that Otis would win the nine contracts.  UTC 
failed to detect the conduct and first learned of it in April 2017, when media reports alleged that the 
Otis Chief Operations Officer paid the Liftremont Senior Official at least $1.7 million to induce 
Liftremont to enter into a contract with Otis. 
 
23. The media reports, which were based on statements made by a relative of the 
Liftremont Senior Official, also alleged that the Senior Official used the $1.7 million from Otis to 
purchase four luxury apartments in an elite Istanbul residential complex.  Altogether, between 

 6 
March 2012 and August 2014, Otis Russia entered into ten contracts totaling $14.6 million to sell 
elevator equipment to Liftremont.   
 
China Aviation Scheme 
 
A. Improper Commissions to Sales Agent 
 
24. In the mid-2000s, IAE and Pratt sought to sell airplane engines to Chinese, state-
owned, commercial airlines.  In 2006, a Pratt executive recommended that IAE retain a Chinese 
sales agent to increase IAE’s market share in China.  The agent was an entity with no background 
or expertise in the airline industry and until 2006 had been in the toll road business.  IAE and Pratt 
conducted minimal due diligence before engaging the sales agent.  Nonetheless, beginning in May 
2006, IAE entered into a sales representative agreement and series of amendments with the agent 
providing a success fee commission of between 1.75 and 4% of sales to Chinese airlines.  In 
October 2009, Pratt engaged the same Chinese sales agent.  From 2009 to 2013, IAE paid 
approximately $55 million in commissions to the agent. 
 
25. In early 2009, IAE competed for a contract with Air China Limited, a state-owned 
entity, potentially worth hundreds of millions at the time less discounts.  IAE’s General Manager 
(“GM”) was leading the Air China campaign along with his supervisor, the VP of Customer 
Business (“VP”) based in the Connecticut office.  The GM and VP were employees of Pratt who 
were seconded to IAE.   
 
26. The agent assisted IAE with the Air China campaign, pursuant to the sales 
representative agreement in effect at the time, which provided for a 4% success fee commission 
rate.  In February 2009, the agent requested a commission advance of $2 million purportedly for an 
office expansion.  The agent provided no documentation to support its need for the advance.  
Moreover, there was little basis to believe that the agent, who mainly arranged introductions and 
meetings, actually intended a $2 million office expansion.  The GM and VP agreed to advance the 
commissions to the agent.   
 
27. The following month, in March 2009, a Chinese airline official, formerly a senior 
purchasing official at Air China, emailed the agent information labeled proprietary and confidential 
about the Air China tender.  That same day, the agent emailed the confidential information to 
IAE’s GM, who in turn emailed the VP that “we have some significant new information.” 
 
28. The GM prepared a comparison of IAE’s bid to the information contained in the 
confidential document.  The next day, the GM emailed the VP a copy of the comparison and the 
email from the agent with the confidential document.  The VP did not ask how the agent obtained 
the confidential document.  IAE subsequently modified its bid.  One month later, in April 2009, 
IAE won the Air China contract. 
 
29. UTC’s policy directed an employee who received proprietary information from 
outside the company to consult the Legal Department.  The GM and VP were both aware of the 
policy, as well as a UTC policy that prohibited improper payments.  Neither the GM nor the VP 

 7 
informed the Legal Department that they had received the confidential document or that they had 
modified their bid after they received confidential information. 
 
30.   The VP and GM disregarded the substantial risk that the agent would use the 
funds to make improper payments to Chinese airline officials for the confidential information used 
to win the bid.  Between March and December 2009, the agent made at least six payments totaling 
over $160,000 to the airline official who provided the confidential document.  In April 2011, 
Chinese officials arrested the airline official in connection with a corruption investigation.  In May 
2013, Chinese media reported that the sales agent made improper payments to the airline official, 
who was convicted of corruption.  UTC halted all future payments to the agent.  Between 2009 and 
2013, the agent was paid $4.3 million in success fee payments for the Air China contract.   
 
B. Improper Sponsorships 
 
31. In addition to requests for advance commission payments for an “office expansion,” 
the agent also requested advance payments for sponsorship of an event for Chinese officials.  In 
November 2009, the agent asked IAE to co-sponsor a golf event for senior executives of Chinese 
state-owned airlines that was to take place in January 2010.  At that point IAE’s GM had been 
promoted to a VP at IAE (“GM/VP”).  The GM/VP obtained approval from IAE’s president to 
contribute $30,000 toward the event, which he referred to as “a weekend event (golf mostly) . . . 
for the top level executives from the Major Chinese Airlines.”  The president’s approval was 
contingent on the approval of the IAE Legal and Business Practices groups. 
 
32. In December 2009, the GM/VP emailed the president of the agent that he was 
“working the legal approval for this event and as usual it is becoming difficult.”  The GM/VP 
wrote that he needed certain information for Legal including: 
 
They have asked for an agenda; We need to call this an Conference in order to ease 
getting this through legal and minimize the Golf event portion.  Hopefully we can 
come up with something that looks like an organized meeting . . . Lastly they want 
conformation that the IAE money will not be spent on “gifts” for the attendees . . . 
we need to be careful how we handle the legal approval. 
 
33. The president of the agent told the GM/VP that Pratt had committed to contributing 
$40,000.  Thus, the intent was to have IAE contribute $30,000 and Pratt contribute $40,000 to the 
golf event.  The president of the agent provided the GM/VP an agenda for the two-and-a-half day 
conference that consisted of two rounds of golf and approximately nine hours of business-related 
sessions.  The president of the agent also stated that “none of the funding will end up in the 
attendees pockets.”  On December 23, 2009, IAE Legal approved the $30,000 contribution.  
Although the sales agent provided no documentation to support the expense, on December 29, 
2009, IAE wired $30,000 to the sales agent for the golf event. 
 
34. Due to various scheduling conflicts, the golf event was postponed one year to 2011.  
The sales agent asked Pratt for an additional $30,000 golf contribution despite the fact that IAE 
had already paid $30,000 in 2009 for the same event.  In April 2011, Pratt’s Business Practices 

 8 
Office (“BPO”) approved a $30,000 expense for the golf event without determining what had 
happened to the prior $30,000 that IAE had paid for the same golf event.  In July 2011, BPO 
requested an agenda for the golf event.  The President of Pratt & Whitney China (“President”) 
responded, “[U]se this one,” and provided an agenda for a two-day conference that consisted of 
one round of golf, a second social event, and approximately seven hours of business-related 
sessions.  An IAE employee suggested “some changes to make that invitation look more like . . . a 
forum, instead of a pure golf event.” 
 
35. The golf event took place on October 28-30, 2011.  At the event, the GM/VP and 
the President learned that the sales agent gave the Chinese airline executives expensive gifts, such 
as iPads and luggage.  After the event, neither informed Legal or BPO of the gifts.  Pratt paid 
$30,000 to the resort that hosted the golf event. 
 
Improper Payments for Otis Elevator Sales in China 
 
36. In 2012, Otis China sought a contract to sell and install four elevator units to a 
branch of a Chinese, state-owned bank located in Wuhan, China (“Bank”).  A Bank official 
organizing the bidding process approached the Sales Supervisor of the Otis China Wuhan branch 
and asked to receive a kickback payment if Otis won the contract.  The supervisor agreed to the 
kickback and proposed using a distributor to accomplish the kickback scheme. 
 
37. The supervisor arranged for an approved Otis China distributor to bid for the Bank 
contract.  He justified using the distributor by falsely asserting that the Bank insisted on terms that 
were not acceptable to Otis China.  The business justification for the use of the distributor was not 
questioned.  No one reviewed the terms of the transaction for appropriateness or questioned 
whether the cost differential between a direct sale by Otis China and a sale involving a distributor 
allowed enough spread for a kickback.  Further, the distributor inserted an unauthorized distributor 
into the project using a fake chop. 
 
38. The distributor passed $98,000 to the Otis China sales supervisor.  The sales 
supervisor paid a portion to the Bank official and kept the remainder for himself.  UTC learned of 
the conduct after Chinese authorities convicted the Otis China sales supervisor of bribery in 
connection with this conduct. 
 
Leisure Travel 
 
39. UTC funded leisure travel and entertainment for foreign officials from several 
countries, including China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.  UTC policies 
required the Legal Department to review and approve all leisure travel and entertainment as gifts to 
a foreign official.  Nonetheless, employees frequently circumvented this requirement by submitting 
travel for foreign officials for approval without disclosing the leisure and entertainment 
component.  On occasion, the travel was included as a cost component in the contract with the end 
customer and was therefore not submitted for appropriate approval. 
 

 9 
40. For example, from at least 2009 to 2015 in connection with business meetings, Pratt 
provided improper entertainment and leisure travel for up to five officials of the Republic of Korea 
Air Force (“ROKAF”) on seven occasions.  At the time, ROKAF was purchasing aftermarket spare 
parts and repair services from Pratt under short-term contracts, and Pratt was seeking to enter into a 
long-term contract to facilitate greater predictability.  The leisure travel provided to the ROKAF 
officials was approved with little or no required review.  On those occasions when Legal reviewed 
the contracts, it failed to identify the FCPA risks presented by sponsored travel.  Furthermore, 
when Pratt supervisors reviewed the travel as required, they failed to note basic red flags such as 
travel to tourist destinations, including Orlando, FL, where Pratt did not have facilities.  Most of 
the trips included a ROKAF senior official, who would attend only one meeting and then spend the 
remainder of the trip engaged in leisure activities.  Pratt and ROKAF entered into a long-term 
services contract in November 2012, and the improper travel of ROKAF officials continued.  Pratt 
spent over $26,000 on entertainment and leisure travel for ROKAF officials during this period. 
 
41. Similarly, Otis also provided improper travel in connection with sales in China.  For 
example, in 2008, the Hangzhou branch of Otis China obtained a $27.6 million contract for the 
Hangzhou Metro Line 1 project.  In 2010, the Otis China project manager approved a 2011 trip to 
Italy and Greece for seven foreign officials associated with the project.  Although the ostensible 
reason for the trip was to inspect equipment in use in subways, the inspections did not occur, and 
the manager knew the trip was purely for leisure. 
 
42. Also in 2008, the Shenzhen branch of Otis China obtained a $3.3 million contract 
for the Shenzhen Metro Line 5 project.  In 2011, the Otis China Major Project Manager approved 
travel to the United States for seven foreign officials.  Although the ostensible reason for the trip 
was to inspect subways in New York City and Otis facilities in the United States, the inspections 
did not occur.  Instead, the foreign officials visited New York City and Washington, DC.  Otis 
China spent $37,926 for this trip. 
 
43. In addition to the purely leisure trips arranged by Otis to influence foreign officials, 
at times UTC businesses provided excessive leisure travel and entertainment in conjunction with 
legitimate business travel.  For example, from 2012 to 2014, the Pratt Belgium Engine Center paid 
for excessive, leisure hotel stays in Belgium and Amsterdam for Air Force officials from Pakistan, 
Thailand, and Indonesia.  In some instances, the leisure component was four times as long as the 
legitimate business component (e.g., four days of leisure and one day of business).  Similarly, Otis 
Kuwait paid for leisure travel to Europe and China on seven trips for 27 foreign officials.  The 
provision of these purely leisure trips, or those that contained an excessive leisure component, 
violated UTC’s corporate policies.  
 
44. Between 2009 and 2015, UTC improperly recorded over $134,000 in improper 
travel and entertainment for foreign officials in the company’s books and records as legitimate 
business expenses. 
 
  

 10 
LEGAL STANDARDS AND VIOLATIONS 
 
45. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-
and-desist order upon any person who is violating, has violated, or is about to violate any provision 
of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was, 
or would be a cause of the violation, due to an act or omission the person knew or should have 
known would contribute to such violation. 
46. As a result of the conduct described in paragraphs 8 through 23, UTC violated 
Section 30A of the Exchange Act, which prohibits any issuer with securities registered pursuant 
to Section 12 of the Exchange Act or which is required to file reports under Section 15(d) of the 
Exchange Act, or any officer, director, employee, or agent acting on its behalf, to make use of 
the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an 
effort to pay or offer to pay anything of value to foreign officials for the purpose of influencing 
their official decision-making, in order to assist in obtaining or retaining business.   
47. Further, as a result of the conduct described above, UTC violated Section 
13(b)(2)(A) of the Exchange Act, which requires issuers to make and keep books, records, and 
accounts, which, in reasonable detail, accurately and fairly reflect the transactions and disposition 
of the assets of the issuer.  
48. In addition, as a result of the conduct described above, UTC violated Section 
13(b)(2)(B) of the Exchange Act, which requires issuers to devise and maintain a system of 
internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 
executed in accordance with management’s general or specific authorization; (ii) transactions are 
recorded as necessary (I) to permit preparation of financial statements in conformity with generally 
accepted accounting principles or any other criteria applicable to such statements, and (II) to 
maintain accountability for assets; (iii) access to assets is permitted only in accordance with 
management’s general or specific authorization; and (iv) the recorded accountability for assets is 
compared with the existing assets at reasonable intervals and appropriate action is taken with 
respect to any differences.   
UTC’S SELF-DISCLOSURE, COOPERATION, AND REMEDIAL EFFORTS 
  
49. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent and cooperation afforded the Commission staff.  UTC self-
reported the misconduct and timely provided facts developed during its internal investigation.  
UTC also cooperated with the Commission investigation by timely producing documents, 
including key document binders and translations of key documents as needed, providing the facts 
developed in its internal investigation, and making current or former employees available to the 
Commission staff, including those who needed to travel to the United States.  
 
50. UTC provided information regarding its remedial efforts, including termination of 
employees and third parties responsible for the misconduct and enhancements to its internal 
accounting controls.  UTC strengthened its global compliance organization; enhanced its policies 

 11 
and procedures regarding travel, the due diligence process, and the use of third parties; created 
positions to address potential risks; and increased training of employees on anti-bribery issues. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent UTC’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent UTC cease and desist 
from committing or causing any violations and any future violations of Sections 13(b)(2)(A), 
13(b)(2)(B), and 30A of the Exchange Act. 
 
 B. Respondent shall, within 10 days of the entry of this Order, pay disgorgement of 
$9,067,142, prejudgment interest of $919,392, and a civil money penalty of $4,000,000, to the 
Securities and Exchange Commission for transfer to the general fund of the United States 
Treasury, subject to  Exchange Act Section 21F(g)(3).  If timely payment is not made, additional 
interest shall accrue pursuant to SEC Rule of Practice 600 and 31 U.S.C. § 3717. 
 
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying UTC 
as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Charles E. Cain, Chief of the FCPA Unit, 
Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
20549-5631B.   
 

 12 
 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
D.   Respondent acknowledges that the Commission is not imposing a civil penalty in 
excess of $4,000,000 based upon its cooperation in a Commission investigation and related 
enforcement action.  If at any time following the entry of the Order, the Division of Enforcement 
(“Division”) obtains information indicating that Respondent knowingly provided materially false 
or misleading information or materials to the Commission, or in a related proceeding, the Division 
may, at its sole discretion and with prior notice to the Respondent, petition the Commission to 
reopen this matter and seek an order directing that the Respondent pay an additional civil penalty.  
Respondent may contest by way of defense in any resulting administrative proceeding whether it 
knowingly provided materially false or misleading information, but may not:  (1) contest the 
findings in the Order; or (2) assert any defense to liability or remedy, including, but not limited to, 
any statute of limitations defense. 
 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 84087 / September 12, 2018 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-18745 

 

In the Matter of 

 

UNITED TECHNOLOGIES 

CORPORATION,  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER  

  

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against United Technologies Corporation (“UTC” or 

“Respondent”).  

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.    



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III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

SUMMARY 
 

1. These proceedings arise from violations of the Foreign Corrupt Practices Act of 

1977 (the “FCPA”) [15 U.S.C. 78dd] by Respondent United Technologies Corporation (“UTC”), a 

building systems and aerospace company with operations around the world.   

 

2. From approximately 2012 through 2014, UTC, through Otis Elevator Company, 

made unlawful payments to Azerbaijan officials to facilitate the sales of elevator equipment.  

Improper payments were also made in connection with a kickback scheme to sell elevators in 

China in 2012.  In addition, from 2009 to 2013, UTC, through International Aero Engines, a joint 

venture of Pratt & Whitney, a division of UTC, made unsupported payments to an agent, 

disregarding the high probability that at least some of the money would be used to make unlawful 

payments to a Chinese official to obtain confidential information to sell engines to a Chinese state-

owned airline.  Finally, from 2009 through 2015, UTC through Pratt & Whitney and Otis Elevator 

Company improperly provided trips and gifts to various foreign officials in China, Kuwait, South 

Korea, Pakistan, Thailand, and Indonesia in connection with its business.  UTC obtained a benefit 

of over $9 million from the conduct. 

 

3. With regard to these various schemes, UTC failed to accurately and fairly record 

the transactions in its books and records and failed to devise and maintain a sufficient system of 

internal accounting controls. 

 

RESPONDENT 
 

4. United Technologies Corporation is a Delaware corporation that was founded in 

1934 and is headquartered in Farmington, Connecticut.  UTC designs, manufactures and markets 

high-technology products and services to the building systems and aerospace industries worldwide.  

UTC stock is registered under Section 12(b) of the Exchange Act, and it is traded on the New York 

Stock Exchange under the symbol “UTX.” 

 

OTHER RELEVANT ENTITIES 

 

5. Otis Elevator Company (“Otis”), a wholly-owned subsidiary of UTC, 

manufactures and maintains elevators, escalators and moving walkways, and operates worldwide 

through a series of affiliated companies and joint ventures.  These include “Otis Russia,” its 

manufacturing and sales operations based in St. Petersburg and Moscow that market to Russia and 

CIS countries; “Otis China,” its operations in China that include two joint ventures majority-owned 

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding.   
 



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by UTC; and “Otis Kuwait,” comprised of a joint venture in which UTC had majority ownership.  

Otis’s financials are consolidated with those of UTC. 

 

6. Pratt & Whitney (“Pratt”) is an operating division of UTC that is headquartered in 

East Hartford, Connecticut.  Pratt designs, manufactures, and services aircraft engines and 

auxiliary power units for commercial and military aircraft.  Pratt’s financials are consolidated with 

those of UTC.   

 

7. International Aero Engines (“IAE”) is a joint venture, founded in 1983 by five 

aerospace companies, including Pratt & Whitney.  It designs, manufactures, and services engines 

for single-aisle, commercial aircraft with an office in East Harford, Connecticut.  On June 29, 

2012, Pratt & Whitney obtained a majority interest in IAE’s shares.  IAE’s relevant financials were 

reported, and its books and records later consolidated, into UTC’s books and records. 

 

FACTS 

 

Russian and Azerbaijani Improper Payment Scheme 

 

8. In 2012, the Azerbaijan government began to upgrade the elevators in public 

housing in Baku.  Otis engaged in various schemes to sell Otis elevator equipment to Baku 

Liftremont, a municipal entity, responsible for procuring and maintaining the elevators in Baku’s 

public housing.  The schemes involved the use of sham subcontractors and intermediaries to make 

improper payments to Liftremont officials.   

 

9. The first scheme in March 2012 was in connection with a direct sale from Otis 

Russia to Liftremont of elevator equipment valued at $1.8 million.  At the direction of the Chief 

Operations Officer, the scheme was facilitated through the use of two subcontractors that were 

used to make payments to Liftremont officials.  No due diligence was performed on the 

subcontractors, and they were paid over $790,000, which represented nearly 44% of the total 

contract value.  No meaningful review was conducted on the contracts with the subcontractors, and 

payments to the subcontractors were made without appropriate documentation of services being 

provided.  

 

10. Between February 2013 and December 2014, Otis sought to win additional 

contracts from Liftremont.  At the direction of a Liftremont Senior Official, Otis Russia involved 

four different intermediaries which acted as conduits to make improper payments in order to secure 

nine contracts from Liftremont.  In each instance, Otis Russia sold elevator equipment to the 

intermediary at one price, knowing that the intermediary would sell the equipment to Liftremont at 

a significantly higher price.  The spread between the prices, at least $11.8 million, was intended in 

part for Liftremont officials. 

 

11. Despite a corporate policy that required it, no due diligence was performed on the 

intermediaries, which were small entities registered in either Russia or Estonia.  None of them had 

local experience in Azerbaijan or reliable experience in either import/export or the elevator 



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industry.  In fact, one of the intermediaries was not a registered entity until February 2014, well 

after participating in Otis’s transactions with Liftremont in 2013.   

 

12. The transactions with the intermediaries should have raised significant red flags 

because Otis Russia already had an approved joint venture (“JV”) partner that was authorized to 

make the sales in Azerbaijan, and no legitimate business justification was provided for using the 

four intermediaries instead. 

 

13. At the direction of the Otis Russia Sales and Business Development Manager 

(“Manager”), Otis Russia staff drafted the contracts between Otis Russia and the intermediaries, as 

well as the contracts between the intermediaries and Liftremont reflecting payment terms.  In 

several instances, the Liftremont Senior Official was copied on emails reflecting the contractual 

payments and shipping arrangements with the intermediaries.  All payments to the intermediaries, 

from Liftremont or from other intermediaries, were in U.S. dollar denominations and involved U.S. 

correspondent banks. 

 

14. On multiple contracts, at the direction of the Liftremont Senior Official, Otis Russia 

staff arranged the transportation of the elevator equipment sold to the intermediaries and prepared 

the customs paperwork to facilitate the intermediaries’ transportation of the equipment across 

borders and into Azerbaijan.  Otis Russia directed monies to countries outside of Russia or 

Azerbaijan.  For example, email traffic in November 2013 among the Liftremont Senior Official 

and Otis regional managers referenced a “Turkey balance” of TRY 214,126. (approximately 

$104,465) followed by a statement that “It’s good for now, [the Liftremont Senior Official] calmed 

down.” 

 

15. The scheme also involved allowing Liftremont officials to use Otis Russia signature 

stamps to falsify documents.  For example, the Otis Russia Manager emailed the Liftremont Senior 

Official and his assistant an electronic image of the stamp of an Otis Russia branch and the 

signature of the head of the company.  In the email, the Manager wrote that the assistant could 

prepare a certificate and apply the official Otis stamp and signature. 

 

16. The transactions with the intermediaries did not follow normal procedures, yet 

between 2012 and 2014, Legal, Finance, and business employees all failed to prevent the improper 

transactions.  Before the contracts were executed, Legal personnel merely confirmed that the 

contracts contained standard terms.  No reviewer sought to confirm that the intermediaries had 

undergone due diligence as required by Otis policies or inquired about contractual terms that 

showed that the intermediaries were acting as distributors.  Further, there was no review of the 

financing structure that would have identified the pricing differentials that generated excess funds 

intended for Liftremont officials. 

 

17. Other methods were also used to funnel improper payments to Liftremont officials.  

In one scheme, Liftremont was made a distributor so that certain Liftremont officials could receive 

additional monies from the sale of Otis elevator equipment and services.  The Otis Regional 

President negotiated the distributorship agreement with the Liftremont Senior Official.  In May-

June 2013, Otis Legal, Finance, and business employees at the local and regional levels and the 



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Otis Regional President approved using Liftremont as a distributor for municipal and government 

elevator projects in Azerbaijan despite numerous red flags, including the fact that Liftremont was 

the government entity responsible for the selection of the supplier for Baku municipal and 

government projects.  The Liftremont distributorship agreement was finalized and executed but not 

implemented. 

 

18. Otis’s JV partner that sold Otis elevators in the Baku market raised numerous 

concerns about improper transactions between Otis and Liftremont.  Otis selected Liftremont as its 

distributor for a Baku municipal elevator project instead of the JV partner, which led to the 

Managing Director of the JV raising concerns with the Otis Regional President.  The Managing 

Director told the Regional President that he should look into the Liftremont contracts because they 

did not comply with “the rules.”  Between July and September 2013, the Managing Director 

emailed the Regional President eight times to request a confidential meeting regarding the 

Liftremont contracts.  Instead, the Regional President forwarded the Managing Director’s emails to 

lower-level Otis Russia staff involved in the Liftremont contracts and took no steps to look into the 

concerns or to elevate those concerns. 

 

19. In the summer of 2014, Otis ignored additional red flags when the Liftremont 

Senior Official instructed Otis Russia to replace one intermediary with a new intermediary.  Otis 

Russia staff drafted a contract with the new intermediary for the sale and circulated it for review.   

 

20. In September 2014, the head of the Otis Russia Legal Department (“Russia 

lawyer”) initially refused to approve the contract and requested information about the ownership of 

the new intermediary and a written explanation from Liftremont as to why it needed the 

intermediary.  In October 2014, the Russia lawyer elevated the issue to his supervisor, the head of 

Otis’s Regional Legal Department (“Regional lawyer”), who contacted the CFO of Otis Russia 

(“Russia CFO”), and engaged in an extended discussion about whether Legal, Finance, or Security 

had responsibility for screening customers and intermediaries. 

 

21. Ultimately, in December 2014, the Russia lawyer gave the Regional lawyer a letter 

from the Liftremont Senior Official containing a perfunctory explanation for why Liftremont 

needed the new intermediary inserted into the contract.  Although the Regional lawyer initially 

challenged the perfunctory explanation, he ultimately approved the contract.  However, the 

intermediary had already entered into a contract with Otis Russia for the Liftremont business four 

months earlier, in August 2014. 

 

22. As a result of the schemes, the intermediaries obtained at least $11.8 million, some 

of which was intended for Liftremont officials so that Otis would win the nine contracts.  UTC 

failed to detect the conduct and first learned of it in April 2017, when media reports alleged that the 

Otis Chief Operations Officer paid the Liftremont Senior Official at least $1.7 million to induce 

Liftremont to enter into a contract with Otis. 

 

23. The media reports, which were based on statements made by a relative of the 

Liftremont Senior Official, also alleged that the Senior Official used the $1.7 million from Otis to 

purchase four luxury apartments in an elite Istanbul residential complex.  Altogether, between 



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March 2012 and August 2014, Otis Russia entered into ten contracts totaling $14.6 million to sell 

elevator equipment to Liftremont.   

 

China Aviation Scheme 

 

A. Improper Commissions to Sales Agent 

 

24. In the mid-2000s, IAE and Pratt sought to sell airplane engines to Chinese, state-

owned, commercial airlines.  In 2006, a Pratt executive recommended that IAE retain a Chinese 

sales agent to increase IAE’s market share in China.  The agent was an entity with no background 

or expertise in the airline industry and until 2006 had been in the toll road business.  IAE and Pratt 

conducted minimal due diligence before engaging the sales agent.  Nonetheless, beginning in May 

2006, IAE entered into a sales representative agreement and series of amendments with the agent 

providing a success fee commission of between 1.75 and 4% of sales to Chinese airlines.  In 

October 2009, Pratt engaged the same Chinese sales agent.  From 2009 to 2013, IAE paid 

approximately $55 million in commissions to the agent. 

 

25. In early 2009, IAE competed for a contract with Air China Limited, a state-owned 

entity, potentially worth hundreds of millions at the time less discounts.  IAE’s General Manager 

(“GM”) was leading the Air China campaign along with his supervisor, the VP of Customer 

Business (“VP”) based in the Connecticut office.  The GM and VP were employees of Pratt who 

were seconded to IAE.   

 

26. The agent assisted IAE with the Air China campaign, pursuant to the sales 

representative agreement in effect at the time, which provided for a 4% success fee commission 

rate.  In February 2009, the agent requested a commission advance of $2 million purportedly for an 

office expansion.  The agent provided no documentation to support its need for the advance.  

Moreover, there was little basis to believe that the agent, who mainly arranged introductions and 

meetings, actually intended a $2 million office expansion.  The GM and VP agreed to advance the 

commissions to the agent.   

 

27. The following month, in March 2009, a Chinese airline official, formerly a senior 

purchasing official at Air China, emailed the agent information labeled proprietary and confidential 

about the Air China tender.  That same day, the agent emailed the confidential information to 

IAE’s GM, who in turn emailed the VP that “we have some significant new information.” 

 

28. The GM prepared a comparison of IAE’s bid to the information contained in the 

confidential document.  The next day, the GM emailed the VP a copy of the comparison and the 

email from the agent with the confidential document.  The VP did not ask how the agent obtained 

the confidential document.  IAE subsequently modified its bid.  One month later, in April 2009, 

IAE won the Air China contract. 

 

29. UTC’s policy directed an employee who received proprietary information from 

outside the company to consult the Legal Department.  The GM and VP were both aware of the 

policy, as well as a UTC policy that prohibited improper payments.  Neither the GM nor the VP 



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informed the Legal Department that they had received the confidential document or that they had 

modified their bid after they received confidential information. 

 

30.   The VP and GM disregarded the substantial risk that the agent would use the 

funds to make improper payments to Chinese airline officials for the confidential information used 

to win the bid.  Between March and December 2009, the agent made at least six payments totaling 

over $160,000 to the airline official who provided the confidential document.  In April 2011, 

Chinese officials arrested the airline official in connection with a corruption investigation.  In May 

2013, Chinese media reported that the sales agent made improper payments to the airline official, 

who was convicted of corruption.  UTC halted all future payments to the agent.  Between 2009 and 

2013, the agent was paid $4.3 million in success fee payments for the Air China contract.   

 

B. Improper Sponsorships 

 

31. In addition to requests for advance commission payments for an “office expansion,” 

the agent also requested advance payments for sponsorship of an event for Chinese officials.  In 

November 2009, the agent asked IAE to co-sponsor a golf event for senior executives of Chinese 

state-owned airlines that was to take place in January 2010.  At that point IAE’s GM had been 

promoted to a VP at IAE (“GM/VP”).  The GM/VP obtained approval from IAE’s president to 

contribute $30,000 toward the event, which he referred to as “a weekend event (golf mostly) . . . 

for the top level executives from the Major Chinese Airlines.”  The president’s approval was 

contingent on the approval of the IAE Legal and Business Practices groups. 

 

32. In December 2009, the GM/VP emailed the president of the agent that he was 

“working the legal approval for this event and as usual it is becoming difficult.”  The GM/VP 

wrote that he needed certain information for Legal including: 

 

They have asked for an agenda; We need to call this an Conference in order to ease 

getting this through legal and minimize the Golf event portion.  Hopefully we can 

come up with something that looks like an organized meeting . . . Lastly they want 

conformation that the IAE money will not be spent on “gifts” for the attendees . . . 

we need to be careful how we handle the legal approval. 

 

33. The president of the agent told the GM/VP that Pratt had committed to contributing 

$40,000.  Thus, the intent was to have IAE contribute $30,000 and Pratt contribute $40,000 to the 

golf event.  The president of the agent provided the GM/VP an agenda for the two-and-a-half day 

conference that consisted of two rounds of golf and approximately nine hours of business-related 

sessions.  The president of the agent also stated that “none of the funding will end up in the 

attendees pockets.”  On December 23, 2009, IAE Legal approved the $30,000 contribution.  

Although the sales agent provided no documentation to support the expense, on December 29, 

2009, IAE wired $30,000 to the sales agent for the golf event. 

 

34. Due to various scheduling conflicts, the golf event was postponed one year to 2011.  

The sales agent asked Pratt for an additional $30,000 golf contribution despite the fact that IAE 

had already paid $30,000 in 2009 for the same event.  In April 2011, Pratt’s Business Practices 



 8 

Office (“BPO”) approved a $30,000 expense for the golf event without determining what had 

happened to the prior $30,000 that IAE had paid for the same golf event.  In July 2011, BPO 

requested an agenda for the golf event.  The President of Pratt & Whitney China (“President”) 

responded, “[U]se this one,” and provided an agenda for a two-day conference that consisted of 

one round of golf, a second social event, and approximately seven hours of business-related 

sessions.  An IAE employee suggested “some changes to make that invitation look more like . . . a 

forum, instead of a pure golf event.” 

 

35. The golf event took place on October 28-30, 2011.  At the event, the GM/VP and 

the President learned that the sales agent gave the Chinese airline executives expensive gifts, such 

as iPads and luggage.  After the event, neither informed Legal or BPO of the gifts.  Pratt paid 

$30,000 to the resort that hosted the golf event. 

 

Improper Payments for Otis Elevator Sales in China 

 

36. In 2012, Otis China sought a contract to sell and install four elevator units to a 

branch of a Chinese, state-owned bank located in Wuhan, China (“Bank”).  A Bank official 

organizing the bidding process approached the Sales Supervisor of the Otis China Wuhan branch 

and asked to receive a kickback payment if Otis won the contract.  The supervisor agreed to the 

kickback and proposed using a distributor to accomplish the kickback scheme. 

 

37. The supervisor arranged for an approved Otis China distributor to bid for the Bank 

contract.  He justified using the distributor by falsely asserting that the Bank insisted on terms that 

were not acceptable to Otis China.  The business justification for the use of the distributor was not 

questioned.  No one reviewed the terms of the transaction for appropriateness or questioned 

whether the cost differential between a direct sale by Otis China and a sale involving a distributor 

allowed enough spread for a kickback.  Further, the distributor inserted an unauthorized distributor 

into the project using a fake chop. 

 

38. The distributor passed $98,000 to the Otis China sales supervisor.  The sales 

supervisor paid a portion to the Bank official and kept the remainder for himself.  UTC learned of 

the conduct after Chinese authorities convicted the Otis China sales supervisor of bribery in 

connection with this conduct. 

 

Leisure Travel 

 

39. UTC funded leisure travel and entertainment for foreign officials from several 

countries, including China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.  UTC policies 

required the Legal Department to review and approve all leisure travel and entertainment as gifts to 

a foreign official.  Nonetheless, employees frequently circumvented this requirement by submitting 

travel for foreign officials for approval without disclosing the leisure and entertainment 

component.  On occasion, the travel was included as a cost component in the contract with the end 

customer and was therefore not submitted for appropriate approval. 

 



 9 

40. For example, from at least 2009 to 2015 in connection with business meetings, Pratt 

provided improper entertainment and leisure travel for up to five officials of the Republic of Korea 

Air Force (“ROKAF”) on seven occasions.  At the time, ROKAF was purchasing aftermarket spare 

parts and repair services from Pratt under short-term contracts, and Pratt was seeking to enter into a 

long-term contract to facilitate greater predictability.  The leisure travel provided to the ROKAF 

officials was approved with little or no required review.  On those occasions when Legal reviewed 

the contracts, it failed to identify the FCPA risks presented by sponsored travel.  Furthermore, 

when Pratt supervisors reviewed the travel as required, they failed to note basic red flags such as 

travel to tourist destinations, including Orlando, FL, where Pratt did not have facilities.  Most of 

the trips included a ROKAF senior official, who would attend only one meeting and then spend the 

remainder of the trip engaged in leisure activities.  Pratt and ROKAF entered into a long-term 

services contract in November 2012, and the improper travel of ROKAF officials continued.  Pratt 

spent over $26,000 on entertainment and leisure travel for ROKAF officials during this period. 

 

41. Similarly, Otis also provided improper travel in connection with sales in China.  For 

example, in 2008, the Hangzhou branch of Otis China obtained a $27.6 million contract for the 

Hangzhou Metro Line 1 project.  In 2010, the Otis China project manager approved a 2011 trip to 

Italy and Greece for seven foreign officials associated with the project.  Although the ostensible 

reason for the trip was to inspect equipment in use in subways, the inspections did not occur, and 

the manager knew the trip was purely for leisure. 

 

42. Also in 2008, the Shenzhen branch of Otis China obtained a $3.3 million contract 

for the Shenzhen Metro Line 5 project.  In 2011, the Otis China Major Project Manager approved 

travel to the United States for seven foreign officials.  Although the ostensible reason for the trip 

was to inspect subways in New York City and Otis facilities in the United States, the inspections 

did not occur.  Instead, the foreign officials visited New York City and Washington, DC.  Otis 

China spent $37,926 for this trip. 

 

43. In addition to the purely leisure trips arranged by Otis to influence foreign officials, 

at times UTC businesses provided excessive leisure travel and entertainment in conjunction with 

legitimate business travel.  For example, from 2012 to 2014, the Pratt Belgium Engine Center paid 

for excessive, leisure hotel stays in Belgium and Amsterdam for Air Force officials from Pakistan, 

Thailand, and Indonesia.  In some instances, the leisure component was four times as long as the 

legitimate business component (e.g., four days of leisure and one day of business).  Similarly, Otis 

Kuwait paid for leisure travel to Europe and China on seven trips for 27 foreign officials.  The 

provision of these purely leisure trips, or those that contained an excessive leisure component, 

violated UTC’s corporate policies.  

 

44. Between 2009 and 2015, UTC improperly recorded over $134,000 in improper 

travel and entertainment for foreign officials in the company’s books and records as legitimate 

business expenses. 

 

  



 10 

LEGAL STANDARDS AND VIOLATIONS 

 

45. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-

and-desist order upon any person who is violating, has violated, or is about to violate any provision 

of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was, 

or would be a cause of the violation, due to an act or omission the person knew or should have 

known would contribute to such violation. 

46. As a result of the conduct described in paragraphs 8 through 23, UTC violated 

Section 30A of the Exchange Act, which prohibits any issuer with securities registered pursuant 

to Section 12 of the Exchange Act or which is required to file reports under Section 15(d) of the 

Exchange Act, or any officer, director, employee, or agent acting on its behalf, to make use of 

the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an 

effort to pay or offer to pay anything of value to foreign officials for the purpose of influencing 

their official decision-making, in order to assist in obtaining or retaining business.   

47. Further, as a result of the conduct described above, UTC violated Section 

13(b)(2)(A) of the Exchange Act, which requires issuers to make and keep books, records, and 

accounts, which, in reasonable detail, accurately and fairly reflect the transactions and disposition 

of the assets of the issuer.  

48. In addition, as a result of the conduct described above, UTC violated Section 

13(b)(2)(B) of the Exchange Act, which requires issuers to devise and maintain a system of 

internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 

executed in accordance with management’s general or specific authorization; (ii) transactions are 

recorded as necessary (I) to permit preparation of financial statements in conformity with generally 

accepted accounting principles or any other criteria applicable to such statements, and (II) to 

maintain accountability for assets; (iii) access to assets is permitted only in accordance with 

management’s general or specific authorization; and (iv) the recorded accountability for assets is 

compared with the existing assets at reasonable intervals and appropriate action is taken with 

respect to any differences.   

UTC’S SELF-DISCLOSURE, COOPERATION, AND REMEDIAL EFFORTS 
  

49. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Respondent and cooperation afforded the Commission staff.  UTC self-

reported the misconduct and timely provided facts developed during its internal investigation.  

UTC also cooperated with the Commission investigation by timely producing documents, 

including key document binders and translations of key documents as needed, providing the facts 

developed in its internal investigation, and making current or former employees available to the 

Commission staff, including those who needed to travel to the United States.  

 

50. UTC provided information regarding its remedial efforts, including termination of 

employees and third parties responsible for the misconduct and enhancements to its internal 

accounting controls.  UTC strengthened its global compliance organization; enhanced its policies 



 11 

and procedures regarding travel, the due diligence process, and the use of third parties; created 

positions to address potential risks; and increased training of employees on anti-bribery issues. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent UTC’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, Respondent UTC cease and desist 

from committing or causing any violations and any future violations of Sections 13(b)(2)(A), 

13(b)(2)(B), and 30A of the Exchange Act. 

 

 B. Respondent shall, within 10 days of the entry of this Order, pay disgorgement of 

$9,067,142, prejudgment interest of $919,392, and a civil money penalty of $4,000,000, to the 

Securities and Exchange Commission for transfer to the general fund of the United States 

Treasury, subject to  Exchange Act Section 21F(g)(3).  If timely payment is not made, additional 

interest shall accrue pursuant to SEC Rule of Practice 600 and 31 U.S.C. § 3717. 

 

Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying UTC 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Charles E. Cain, Chief of the FCPA Unit, 

Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 

20549-5631B.   

 

http://www.sec.gov/about/offices/ofm.htm


 12 

 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

D.   Respondent acknowledges that the Commission is not imposing a civil penalty in 

excess of $4,000,000 based upon its cooperation in a Commission investigation and related 

enforcement action.  If at any time following the entry of the Order, the Division of Enforcement 

(“Division”) obtains information indicating that Respondent knowingly provided materially false 

or misleading information or materials to the Commission, or in a related proceeding, the Division 

may, at its sole discretion and with prior notice to the Respondent, petition the Commission to 

reopen this matter and seek an order directing that the Respondent pay an additional civil penalty.  

Respondent may contest by way of defense in any resulting administrative proceeding whether it 

knowingly provided materially false or misleading information, but may not:  (1) contest the 

findings in the Order; or (2) assert any defense to liability or remedy, including, but not limited to, 

any statute of limitations defense. 

 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary