Dish raises specter of SoftBank's connection to UTStarcom, bribery allegations

The battle between Japan's SoftBank and Dish Network (NASDAQ: DISH) for control of Sprint Nextel (NYSE:S) is getting nastier, with Dish warning the FCC that it should take into account SoftBank's ties to UTStarcom, which settled bribery allegations in 2009 with the Department of Justice.

The filing by Dish comes shortly after SoftBank CEO Masayoshi Son said his company will not raise its $20.1 billion offer for 70 percent of Sprint to compete with Dish's unsolicited $25.5 billion counterbid because he said SoftBank's offer is already superior. Son called Dish's offer "incomplete and illusory" and said Dish's offer "includes statements that are misleading."

In a filing with the FCC, Dish pointed to recent media reports from TR Daily and Politico about the DOJ investigation into UTStarcom, known as UTSI. The reports noted that in 2009 UTSI agreed to pay $1.5 million and admit to the DOJ that it had engaged in illegal bribery.

Specifically, the DOJ alleged that, starting in 2002 or earlier, UTSI gave bribes totaling around $7 million to Chinese government officials in exchange for telecommunications sales contracts, in violation of the Foreign Corrupt Practices Act. According to the DOJ settlement, UTSI gave all-expenses-paid vacations to the employees and then improperly accounted for such trips as having a "training" purpose.

Son was chairman of UTSI from October 1995 until March 2003, and a board member until September 2004. UTSI is based in China and works primarily in the IPTV and wireline broadband markets. 

"Dish believes that this information is relevant to the public interest analysis of the proposed transaction, and that it is incumbent up on the proposed transferee SoftBank to provide a full explanation of these matters," Dish said in the filing.

A Sprint spokesman declined to comment. A SoftBank spokesman did not immediately respond to a request for comment.

The FCC is currently reviewing the SoftBank/Sprint deal, though Dish has asked the FCC to pause its review of the deal while Sprint's board considers Dish's own counterbid for Sprint. Sprint and SoftBank have said they think the deal can close by July 1 and Sprint has tentatively set June 12 for a shareholder vote on the transaction.

Dish's filing comes shortly after the company said its offer for Sprint "is better for the American consumer, better for Sprint's shareholders, and better for U.S. national security than the SoftBank proposal." Dish's comments were likely a reference to worries that Sprint could use equipment from Chinese vendors ZTE and Huawei in its network. U.S. regulators have warned that U.S. companies should not purchase equipment from ZTE and Huawei due to security concerns, a situation that the Chinese vendors have argued against.

For more:
- see this FCC filing
- see this The Hill article
- see this Denver Post article

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