Juniper Networks agreed to pay the SEC $11.7 million to settle FCPA violations for conduct occurring in Russia and China.  See Order Here.  Under the settlement, Juniper Networks agreed to disgorgement of $4 million, a $6.5 million civil penalty, and pre-judgment interest of $1.3 million.

The Juniper Networks investigation was initiated approximately six years ago in 2013.  The Justice Department had declined to prosecute Juniper Networks in late 2017, leaving the SEC matter to be resolved. 

The investigation focused on Juniper Network’s conduct in Russia and China.

From 2008 to 2013, Jupiter Network’s sales employees in Russia secretly agreed with its third-party channel partners to increase the sales discount amounts without passing on such savings to end-user customers.  The additional funds were then diverted to “common funds” in order to pay for travel and entertainment of customers, including government officials and their families.

The trips were arranged for locations such as Italy, Portugal and various U.S. cities where there were no Juniper facilities, industry specific conferences or other possible legitimate business justifications.  In some situation, the trips included sightseeing tours, amusement park visits, national park excursions and meals and entertainment.

The trips and entertainment was part of an effort to secure contracts with customers.  In one example, a Juniper Networks employee stated that the purpose of a trip was to meet with a “top [state-owned customer] manager to speed up Q2 bookings;” and in another example, a Juniper Networks employee asked to take a state-owned customer on a seven day leisure trip to the U.S., and stated that if the trip did not occur, Juniper Network would lose customer sales.

In 2009, Juniper Networks senior management learned about the off-the-books accounts in Russia, and instructed the employees to discontinue the practices.  However, the juniper Networks employees continued the practices through 2013.  To carry out the plan, the Juniper Networks employees used personal communications devices to coordinate the arrangements and continue the strategy.

In China, from 2009 to 2013, local employees paid for travel and entertainment of customers, including foreign officials.  To secure approval of these expenditures, Juniper Network local employees submitted false agendas to Juniper Network’s legal department for trips that understated the amount of entertainment involved in the event.  In some cases, the events were approved after the event had occurred, contrary to corporate policy which required prior review and approval.

The SEC cited Juniper Network’s cooperation during the investigation and remediation of its compliance program.  Juniper Network cooperated by providing factual disclosures after it had learned of the SEC’s investigation. 

Juniper Network’s remediation included revising its compliance policies and enhancing its compliance organization.  Juniper Networks created an independent Chief Compliance Officer with integrated compliance staff reporting to the CCO.  In addition, the company created an independent and expert investigations function; adopted a mandatory escalation policy to ensure that the Board was aware of significant issues; implemented a mandatory due diligence and prior approval process of channel partners and vendors.  With respect to discounts, the company adopted a compliance preview and required pre-approval of non-standard discounts.  Also, the company required pre-approval for third-party gifts, travel and entertainment, channel marketing expenses and even certain operating expenses in high risk markets.