The SEC today announced non-prosecution agreements with two unrelated companies that will forfeit ill-gotten gains connected to bribes paid to Chinese officials by foreign subsidiaries. Prior to these settlements, the SEC had entered into only one other NPA, back in 2013.
Internet services provider Akamai Technologies has agreed to pay $652,452 in disgorgement plus $19,433 in interest. According to the non-prosecution agreement (NPA), Akamai’s foreign subsidiary arranged $40,000 in payments to induce government-owned entities to purchase more services than they actually needed. Employees at the foreign subsidiary violated the company’s written policies by providing improper gift cards, meals, and entertainment to officials at these state-owned entities to build business relationships.
Residential and commercial building products manufacturer Nortek has agreed to pay $291,403 in disgorgement plus $30,655 in interest. According to its NPA, approximately $290,000 in improper payments and gifts were made to Chinese officials by Nortek’s subsidiary in order to receive preferential treatment, relaxed regulatory oversight, or reduced customs duties, taxes, and fees. These included cash payments, gift cards, meals, travel, accommodations, and entertainment.
Both companies self-reported the misconduct promptly, and they cooperated extensively with the ensuing SEC investigations, the agency said. The NPAs stipulate that the companies are not charged with violations of the Foreign Corrupt Practices Act and do not pay additional monetary penalties.
“When companies self-report and lay all their cards on the table, non-prosecution agreements are an effective way to get the money back and save the government substantial time and resources while crediting extensive cooperation,” Andrew Ceresney, Director of the SEC Enforcement Division, said in a statement.
“Regulators are sending a clear message that companies that self-report and cooperate extensively can reach a swift resolution under the right circumstances,” says Kim Nemirow, a partner at law firm Ropes & Gray, who represented Akamai. “Akamai’s resolution also demonstrates the significant credit companies can receive from conducting a targeted and efficient investigation, and from taking important remedial measures, all steps that Akamai took.”
According to both NPAs, the SEC credited the companies with taking the following actions:
Reported the situation to the SEC on their own initiative in the early stages of internal investigations;
Shared detailed findings of the internal investigations and provided timely updates to enforcement staff when new information was uncovered;
Provided summaries of witness interviews and voluntarily made witnesses available for interviews, including those in China;
Voluntarily translated documents from Chinese into English;
Terminated employees responsible for the misconduct; and
Strengthened their anti-corruption policies and conducted extensive mandatory training with employees around the world with a focus on bolstering internal audit procedures and testing protocols.
“Akamai and Nortek each promptly tightened their internal controls after discovering the bribes and took swift remedial measures to eliminate the problems,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit. “They handled it the right way and got expeditious resolutions as a result.”