The Justice Department said UTSI had agreed to pay a 1.5-million-dollar fine for violating the Foreign Corrupt Practices Act by providing "travel and other things of value" to employees of state-owned Chinese telecom firms.

The Securities and Exchange Commission (SEC) said the Alameda, California, company had agreed to pay an additional 1.5 million dollars for authorizing millions of dollars in unlawful payments to Asian government officials.

"UTStarcom spent millions of dollars on illegal bribes to win and keep customers in Asia," Marc Fagel, director of the SEC's San Francisco regional office, said in a statement.

"It is important for corporate America to recognize that resorting to these methods of boosting profits contributes to a culture of corruption that cannot be condoned under US law," he said.

The Nasdaq-listed UTSI sells telecommunications network equipment and handsets and does business in China through its wholly-owned subsidiary UTStarcom China Co. Ltd. (UTS-China).

The SEC complaint alleged that UTS-China paid nearly seven million dollars between 2002 and 2007 for hundreds of overseas trips by employees of Chinese government-controlled telecom companies that were customers of UTStarcom.

"In reality, the trips were entirely or primarily for sightseeing," it said.

UTStarcom also provided "lavish gifts and all-expenses paid executive training programs" in the United States for existing and potential foreign government customers in China and Thailand, the SEC said.

In addition, it said, UTStarcom made improper payments to "sham consultants" in China and Mongolia while knowing they would pay bribes to foreign government officials.

The Justice Department said UTS-China had arranged and paid for employees of Chinese state-owned telecom firms to travel to US tourist destinations such as Hawaii, Las Vegas and New York City.

It said the trips were purportedly for training but UTSI had no facilities in those locations and no training was conducted.

"UTS-China then falsely recorded these trips as 'training' expenses, while the true purpose for providing these trips was to obtain and retain lucrative telecommunications contracts," the Justice Department said in a statement.

UTSI shares were trading 3.69 percent higher in New York at 2:00 pm (1900 GMT) at 2.25 dollars.

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