SEC Enters into Two Non-Prosecution Agreements for Alleged FCPA Violations
In June 2016 the US Securities and Exchange Commission (SEC) announced that it had entered into two non-prosecution agreements (NPAs) with two unrelated companies whose foreign subsidiaries had each provided improper payments and gifts to Chinese government officials, contrary to the Foreign Corrupt Practices Act (FCPA). To resolve the allegations, Akamai Technologies, Inc. will pay US$652,542 in disgorgement and US$19,433 in interest, and Nortek Inc. will pay US$291,403 in disgorgement and US$30,655 in interest. The NPAs specify that the companies are not charged with violations of the FCPA nor will they pay additional monetary penalties.
The SEC’s announcement and the NPAs highlight that both Akamai and Nortek swiftly reported the conduct, undertook an internal investigation, provided thorough and timely cooperation with the SEC investigations, and implemented remedial measures. In particular, the SEC noted that the companies:
- Self-reported the conduct to the SEC in the early stages of internal investigations;
- Shared detailed findings of the internal investigations and provided timely status updates;
- Provided summaries of witness interviews and voluntarily made witnesses available for interviews, including those located in China;
- Voluntarily translated documents from Chinese to English;
- Terminated employees responsible for the misconduct; and
- Strengthened their anti-corruption policies and conducted extensive mandatory training with all employees with a focus on bolstering internal audit procedures and testing protocols.
Significantly, an NPA had only been used once before in the context of resolving FCPA violations. Moreover, the Akamai and Nortek NPAs were the first NPAs entered into since the April announcement of the US Department of Justice’s pilot program to standardize the benefits of self-reporting potential violations of the FCPA, cooperating with authorities and, where necessary, implementing appropriate remediation measures (refer to our earlier Post for further details).
In Canada there is no centralized enforcement authority with whom Canadian companies who have potentially violated the Corruption of Foreign Public Officials Act (CFPOA) are able to negotiate a deal. The CFPOA contains criminal offences, and therefore CFPOA investigations are carried out by the Royal Canadian Mounted Police and prosecution is ultimately determined by the Public Prosecution Service of Canada. Moreover, Canada has not yet adopted the practice of entering into NPAs (or deferred prosecution agreements) as a means of resolving bribery offences under the CFPOA. However, there is some pressure on the Canadian government to consider this approach to the settlement of such criminal cases. SNC-Lavalin, for example, has been a staunch advocate for establishing this approach in Canada. It remains to be seen whether these important distinctions in Canadian law and practice will impact the Canadian government’s ability to make significant progress in CFPOA enforcement.
 Criminal fraud and corruption charges were filed against SNC-Lavalin in February 2015. In December 2015 SNC-Lavalin entered into an administration agreement under the federal government’s Integrity Regime pursuant to which SNC-Lavalin will remain eligible to bid and win on federal government contracts, pending resolution of the criminal charges (for further details regarding the charges, refer to our Update. For further details regarding the administration agreement, refer to our Update).