PTC Inc., a fixture on the Massachusetts high-tech scene for more than 30 years, agreed to pay $28 million to settle federal civil and criminal charges that it made illicit payments to Chinese officials to win business contracts.
The Securities and Exchange Commission on Tuesday said PTC’s Chinese subsidiaries provided government officials with $1.5 million in improper gifts, including guided tours of Honolulu and Los Angeles, golf outings, cellphones, wine, and clothing.
The Needham company agreed to pay the SEC $11.8 million, plus interest, for profits earned on sales contracts with Chinese state-owned entities where officials received improper payments between 2006 and 2011. In addition, PTC’s two China subsidiaries agreed to pay a $14.5 million fine in a non-prosecution agreement with the US Department of Justice.
“PTC failed to stop illicit payments, despite indications of potential corruption by agents working with its Chinese subsidiaries, and the misconduct continued unabated for several years,” said Kara Brockmeyer, chief of the SEC enforcement unit that investigates matters involving the Foreign Corrupt Practices Act.
The company, in a statement, said it has fired the employees who were involved in the case, replaced its leadership team in China, and enhanced its compliance practices. PTC said it was “pleased to have resolved this matter.”
Third-party agents typically arranged overseas sightseeing outings in conjunction with business trips for the Chinese officials, the SEC said. After a day of business activities, the additional days of sightseeing visits “lacked any business purpose,’’ according to the regulator’s findings.
Travel destinations included Boston, New York, Las Vegas, San Diego, and other cities. In 2008, the SEC found, six Chinese officials and a PTC-China salesperson visited the company’s Needham headquarters for a one-day meeting. But the trip was extended to 10 days and included tours across the country and lodging in five-star hotels.
At a cost of $51,495, the group was taken on tours of Harvard, MIT, and Faneuil Hall while in Boston; to the Statue of Liberty and a professional basketball game in New York; and on tours of the Grand Canyon and Pearl Harbor on stops to other locations.
In its settlement, the SEC said it considered PTC’s “self-reporting of its misconduct” as well as the “significant remedial acts” the company has since undertaken.
The SEC also said a former employee of one of PTC’s Chinese subsidiaries had provided “significant cooperation” in the investigation. That person, Yu Kai Yuan, will not be subject to any enforcement action for at least three years, the SEC said. The deferred enforcement program requires the person’s ongoing cooperation.
PTC shares were up less than 1 percent, to $28.80 in afternoon trading. The company had previously disclosed that the investigations were underway.