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SEC Proceeds With 2 Non-Prosecute Agreements in FCPA Cases

Chris Lange

Published: June 7, 2016 1:25 pm

Last Updated: January 13, 2020 7:05 am

The U.S. Securities and Exchange Commission (SEC) recently announced non-prosecution agreements (NPAs) with two unrelated companies that will forfeit ill-gotten gains connected to bribes paid to Chinese officials by foreign subsidiaries.

Massachusetts-based internet services provider Akamai Technologies Inc. (NASDAQ: AKAM) has agreed to pay $652,452 in disgorgement plus $19,433 in interest. According to the 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.

At the same time, Rhode Island-based residential and commercial building products manufacturer Nortek Inc. (NASDAQ: NTK) has agreed to pay $291,403 in disgorgement plus $30,655 in interest. According to the NPA, roughly $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.

Both companies self-reported the misconduct promptly, and they cooperated extensively with the ensuing SEC investigations. The non-prosecution agreements stipulate that the companies are not charged with violations of the Foreign Corrupt Practices Act (FCPA) and do not pay additional monetary penalties.

Andrew Ceresney, director of the SEC Enforcement Division, commented:

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.

Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit, added:

Akamai and Nortek each promptly tightened their internal controls after discovering the bribes and took swift remedial measures to eliminate the problems. They handled it the right way and got expeditious resolutions as a result.