The US-headquartered networking vendor Juniper Networks has been fined a total of over US$11.7 million for “improper travel practices” in its Russia and China subsidiaries from 2008 to 2013, according to the Securities and Exchange Commission (SEC).
Starting from 2008, the SEC claimed certain Russian employees of Juniper’s Russian subsidiary JNN Development agreed with certain third party channel partners in secret to increase the discount on sales made to customers but did not pass the savings onto customers. Instead, the channel partners withheld the savings in off-book accounts dubbed the “common fund”.
The common funds were used to pay for trips for certain customers to locations like Italy, Portugal and certain cities in the US – locations that do not contain any Juniper facilities and did not host any Juniper-related conferences or events.
Although Juniper was made aware of the common fund in late 2009 and told the JNN employees to cease this practice, the JNN employees continued to do so through to 2013.
The SEC also claimed that from 2009 through to 2013, certain sales employees of Juniper China paid for excessive trips that went against Juniper's policies, and falsified trip and meeting agendas to understate the true value.
“Juniper failed to accurately record the incremental discounts and travel and marketing expenses in its books and records, and failed to devise and maintain a system of internal accounting controls sufficient to prevent and detect off-book accounts, unauthorised customer trips, falsified travel agendas and after-the-fact travel approvals,” a summary from the SEC stated.
As a result, the SEC ordered Juniper Networks to repay US$4 million as a disgorgement, US$1.2 million in prejudgement interest and a civil penalty of US$6.5 million, totalling US$11.7 million.