On June 7, the SEC announced it had entered into non-prosecution agreements with two unrelated companies in connection with bribes paid to Chinese officials by foreign subsidiaries. First, a Massachusetts-based internet services provider agreed to pay $652,000 in disgorgement and $19,433 in interest. According to its agreement, the company’s foreign subsidiary had paid bribes to induce Chinese government-owned entities to purchase more services than they needed. Second, a Rhode Island-based residential and commercial building products manufacturer agreed to pay $291,000 in disgorgement and $30,000 in interest. According to that agreement, the company’s subsidiary made improper payments and gifts to Chinese officials in exchange for preferential treatment, relaxed regulatory oversight, and reduced customs duties, taxes, and fees. The agreements each stipulate that the companies are not charged with violations of the FCPA and will not pay any additional monetary penalties.

In support of the agreements, the SEC noted that both companies promptly self-reported the conduct and cooperated extensively with the ensuing investigations. Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, praised the companies for “promptly tighten[ing] their internal controls after discovering the bribes and [taking] swift remedial measures to eliminate the problems.”

Also on June 7, each company released letters from the DOJ declining to pursue enforcement actions against the companies. The letters are the first public declinations issued by the DOJ under its FCPA Pilot Program announced in April 2016. The one-year Pilot Program is designed to encourage companies to voluntarily self-report potential FCPA-related misconduct and cooperate with federal investigations. DOJ declined to pursue enforcement actions based on several factors, including that the companies identified the misconduct themselves, promptly self-disclosed the misconduct, thoroughly investigated the misconduct, enhanced their compliance programs and internal accounting controls, terminated the employees responsible for the misconduct, disgorged any ill-gotten gains, fully cooperated with the federal investigations, and agreed to cooperate with any future investigations.