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Akamai, SEC settle investigation over China bribery

Akamai Technologies Inc. will pay more than $670,000 to avoid prosecution over bribes that an employee paid to Chinese government officials, the Securities and Exchange Commission said Tuesday.

Federal officials said Akamai avoided prosecution in part by reporting the incident to regulators and cooperating with the government’s investigation.

“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,” SEC enforcement division director Andrew Ceresney said in a news release.

Akamai, based in Cambridge, sells software that helps data move more quickly over the Internet.

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The SEC said the bribery scheme revolved around a regional sales manager at Akamai-China, the company’s Beijing-based subsidiary. That manager, the SEC said, bribed some customers — including government-owned entities — to sign contracts for up to 100 times the network capacity they needed. The bribe money came from a third-party vendor that sold Akamai services, which made money on the subsequent contracts, the SEC said.

In all, the regional sales manager paid about $155,500 in bribes, including about $38,500 in cash to government officials. The SEC also said employees at Akamai-China “routinely provided improper gifts and entertainment to employees of its end customers,” including some $32,000 to Chinese government figures.

Those bribes and gifts were improperly recorded as legitimate business spending, which tainted Akamai’s corporate accounting, the SEC said.

The company reported the bribery scheme in late December 2014, just weeks after being alerted to the problem by an employee at its Chinese subsidiary, the SEC said. Akamai also disclosed some details about the investigation publicly, saying in a 2015 regulatory filing that it related to “sales practices in a country outside the US”

SEC officials said Akamai took quick action to remedy the incident, canceling its business with the vendor and suspending the manager, who later resigned. The company also beefed up its anticorruption policies and training, strengthened its investigations of resellers, and required tougher expense reporting in China.

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“Akamai’s comprehensive cooperation with regulators and the significant remedial measures it took provide a model for others to follow,” said Joshua Levy, a partner with law firm Ropes & Gray, which represented Akamai.


Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.