Two Companies Avoid FCPA Charges through NPAs that Underscore the Value of Self-Reporting and Cooperation with the SEC
The SEC announced two non-prosecution agreements on June 7, 2016 that companies entered into to avoid charges related to the payment of bribes to Chinese officials by their foreign subsidiaries. Press Rel. No. 2016-109. Pursuant to the NPAs, each company will forfeit gains related to the bribes, but the NPAs stipulate that the companies are not charged with violations of the FCPA and will not pay additional monetary penalties.
The SEC’s announcement of the NPAs emphasizes the value the staff put on the companies’ promptly self-reporting the misconduct, cooperating with the SEC, and quickly taking corrective action. The NPAs identified several actions taken by each company that weighed in their favor, including: (i) reporting to the SEC during their internal investigations; (ii) sharing detailed findings of the investigations and updating enforcement staff regarding new information; (iii) providing summaries of witness interviews and making witnesses available for interview, including foreign witnesses; (iv) voluntarily translating documents; (v) terminating the responsible employees; (vi) strengthening their anti-corruption policies; and (vii) conducting extensive mandatory training.
The first company, Akamai Technologies, Inc., is an internet services provider based in Cambridge, Massachusetts, with operations in North America, Europe, and China. According to the NPA, Akamai’s Chinese subsidiary, Akamai (Beijing) Technologies, Co. Ltd., provided payments, expensive gifts, gift cards, meals, and entertainment valued at approximately $155,500 from 2013 to 2015 to employees of end customers, including approximately $38,500 in cash to Chinese government officials. Akamai Non-Prosecution Agreement. The payments were made to obtain or retain business, including to induce government-owned entities to purchase up to 100 times more network capacity than needed. As a result of its foreign subsidiary’s conduct, Akamai will pay $652,452 in disgorgement and $19,433 in interest.
The second company, Nortek, Inc., is a residential and commercial building products manufacturer based in Providence, Rhode Island. According to the NPA, Linear Electronics (Shenzhen) Co. Ltd., an indirect wholly-owned subsidiary of Nortek located in China, made approximately $290,000 in improper payments and gifts to Chinese officials over many years, in the form of cash payments, gift cards, meals, travel, accommodations, and entertainment, in order to receive preferential treatment, relaxed regulatory oversight, or reduced customs, duties, taxes, and fees. Nortek Non-Prosecution Agreement. As a result of its subsidiary’s conduct, Nortek will pay $291,403 in disgorgement and $30,655 in interest.