Want some early evidence of the effect of the Justice Department FCPA Pilot Program? Read nothing more than this letter send out by FCPA Unit head Daniel Kahn to both Akamai Technologies, Inc. and Nortek Inc. this week, declining to prosecute both companies. (Nortek received a similar letter.)
Kahn wrote, “Based upon the information known to the Department at this time, we have closed our inquiry into this matter. Consistent with the FCPA Pilot Program, we have reached this conclusion despite the bribery by an employee of the Company's subsidiary in China and one of that subsidiary's channel partners, based on a number of factors, including but not limited to Akamai's prompt voluntary self-disclosure of the misconduct, the thorough investigation and fulsome cooperation by the Company (including by identifying all individuals involved in or responsible for the misconduct and by providing all facts relating to that misconduct to the Department) and its agreement to continue to cooperate in any ongoing investigations of individuals, the steps that the Company has taken to enhance its compliance program and its internal accounting controls, the Company's full remediation (including promptly suspending at the start of the investigation the individual involved in the China misconduct who then resigned shortly thereafter, terminating the relationship with the channel partner involved in the misconduct, and disciplining five other employees who should have prevented other violations of the Company's policies), and the fact that Akamai will be disgorging to the SEC the full amount of disgorgement as determined by the SEC.”
For those who bemoaned the Justice Department had somehow missed the mark with its FCPA Pilot Program, the declination letters sent out to Akamai Technologies, Inc. and Nortek Inc. are Exhibit A that if you follow the three prescriptions required under the Pilot Program, your company will receive significant credit going forward.
In addition to the excellent results for both companies in the form of declinations from the Justice Department, they both received non-prosecution agreements (NPAs) from the Securities and Exchange Commission. Both companies paid relatively low penalties and they were both only assessed the remedy of profit disgorgement, with interest. Akamai agreed to profit disgorgement of in the amount of $652,452, together with prejudgment interest thereon in the amount of $19,433. Nortek agreed to profit disgorgement in the amount of $291,403, together with prejudgment interest thereon in the amount of $30,655.
For the compliance practitioner, both NPAs are also useful because the laid out the steps both companies took which you fit into the format of the FPCA Pilot Program; that is (1) self-disclosure, (2) cooperation during the investigation, (3) remedial actions taken, and (4) profit disgorgement. Both NPAs also laid out in some detail the illegal conduct engaged in by both companies which led to the FCPA violations.
For any compliance professional these NPAs should be studied and can be used to benchmark your compliance program. As both companies sustained FCPA violations in China, the NPAs can also be used to test your compliance regime in that country.