The US Securities and Exchange Commission (“SEC“) announced earlier this month that it had entered into non-prosecution agreements (“NPAs“) with two companies that had (according to the NPAs) paid bribes to Chinese officials via their foreign subsidiaries. The two NPAs were in respect of the following:
- Akamai Technologies (an internet services provider): the NPA reports that its foreign subsidiary paid bribes of US$40,000 to government owned entities. The company has agreed to pay US$652,452 in disgorgement along with US$19,433 in interest.
- Nortek Inc (a residential and commercial building products manufacturer): the NPA reports that bribes of US$290,000 were paid to Chinese officials by a foreign subsidiary of the company. The company has agreed to pay US$291,403 in disgorgement and US$30,655 in interest.
The entry into these NPAs is significant in light of the recent implementation of the US DoJ’s one-year pilot programme, announced in April 2016, which is designed to encourage companies to disclose violations of the Foreign and Corrupt Practices Act (“FCPA“) of overseas bribery of a foreign official. The DoJ determined that both companies had, through their prompt self-reporting, high degree of co-operation and swift remedial action, complied with the requirements of the pilot programme. The DoJ therefore issued its first public declinations of criminal enforcement action under the pilot scheme. As such, Akamai and Nortek will not be charged with violations of the FCPA provided that they comply with the terms of their respective NPAs. The NPAs are also significant for the SEC which, prior to these NPAs, had only entered into one other NPA in respect of a FCPA offence.
The two cases will give US businesses food for thought regarding how they should deal with potential FCPA claims going forward, as the Akamai and Nortek NPAs demonstrate that there can be significant advantages to be gained by conducting a full investigation and co-operating promptly and fulsomely with the relevant authorities.