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SEC Enters into NPAs in Two FCPA Cases

The SEC entered into non-prosecution agreements ("NPA") with two unrelated companies on the condition they forfeit ill-gotten gains from bribes allegedly paid to Chinese officials by foreign subsidiaries. The companies' alleged actions would have violated the Foreign Corrupt Practices Act ("FCPA").

According to one NPA, the foreign subsidiary of a company arranged $40,000 in payments to induce government-owned entities to purchase more services than necessary. The NPA stated that 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 in order to build business relationships.

An NPA for a second company stated that a foreign subsidiary made approximately $290,000 in improper payments and gifts to Chinese officials in order to receive preferential treatment, relaxed regulatory oversight, and reduced customs duties, taxes and fees. These included cash payments, gift cards, meals, travel, accommodations and entertainment.

The SEC noted that both companies self-reported the misconduct promptly and cooperated extensively with subsequent SEC investigations. As a result, the companies were not charged with FCPA violations. SEC Enforcement Director Andrew Ceresney emphasized the importance of voluntary self-disclosure and the value of NPAs:

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.

The first company agreed to pay $652,452 in disgorgement plus $19,433 in interest; the second company agreed to pay $291,403 in disgorgement plus $30,655 in interest.

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Gifts and Entertainment
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