Article by John Joy, Managing Attorney, FTI Law.
Technology has come a long way in the last decade but IT support hasn’t changed: “Have you tried turning it off, then turning it on again?” For one proud IT worker, the days of answering beleaguered calls for tech support may be over after taking home a cool $3.5 million whistleblower bounty for reporting excessive travel at Juniper Networks (NYSE: JNPR).
Juniper Networks is an IT company headquartered in Sunnyvale, California, that sells equipment like internet routers. Juniper ran into trouble when a whistleblower reported that the company had devised a scheme to pay for luxurious vacations for government officials in Russia and China. Under a U.S. law called the Foreign Corrupt Practices Act (FCPA) this type of conduct is usually considered a bribe, and led to Juniper settling FCPA charges for $11.7 million with the SEC. The whistleblower who provided information appears to have got the full 30% whistleblower bounty for reporting, a total award of $3.5 million.
The Scheme
The story of how Juniper employees paid for the trips is an FCPA story we have all heard before: Juniper employees in Russia and China told their bosses that they needed to offer discounts on their products in order to make sales. The bosses agreed to lower prices, but the employees never reduced prices, continuing to charge customers full price and passing on discounted profits to their bosses. The employees did this with the help of a “channel partners” (usually a distributor) who kept the extra profit in a slush fund for the employees to use.
Once the employees had topped up the slush fund, they used it to give government officials in China and Russia sight-seeing trips to Italy, Portugal and the U.S. According to the SEC, even though senior management at Juniper found out about the scheme, their efforts to shut it down were “ineffective” and the scheme continued for at least 3 years after it was discovered. This led the SEC to order Juniper to pay a fine of $11.7 million, of which $3.5 million went to the IT worker who reported the conduct. The SEC credited the whistleblower, who was not a U.S. national, with assisting the investigation and even travelling to meet U.S. investigators to help uncover the fraud.
Sound Familiar?
A whistleblower award is given to the person who provides information to the SEC first, so if anything in this article sounds familiar, act fast. If you’d like to learn whether you might qualify for a whistleblower award take our online evaluation here or speak to an FCPA whistleblower attorney free of charge.
