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Juniper Shares Drop In Wake Of DOJ Probe

Juniper Networks is being investigated by the U.S. Department of Justice for potential violation of the U.S. Foreign Corrupt Practices Act.

Juniper disclosed the information in a 10-K form filed with the U.S. Securities and Exchange Commission on Thursday. The investigations are being performed by both the SEC and the U.S. Department of Justice.

Juniper told CRN in a statement that it is "cooperating" with the ongoing investigations, and that it is "unable to predict the duration, scope or outcome of these investigations."

[Related: Juniper Bulks Up Partner Advantage With New Services Specializations ]

The Foreign Corrupt Practices Act, according to documentation from the DOJ, is a "critically important statute" for preventing corruption, including bribery, within international business. "When business is won or lost based on how much a company is willing to pay in bribes rather than on the quality of its products and services, law-abiding companies are placed at a competitive disadvantage -- and consumers lose," members of both corporations wrote in the Resource Guide to the U.S. Foreign Corrupt Practices Act.

Juniper isn't the only technology vendor to be probed for potential corruption abroad. In September of last year, a Hewlett-Packard employee faced bribery charges in Germany after an investigation of a $45 million IT contract with the Russian government turned up evidence of potential misconduct. HP wasn't facing charges itself, but in 2010, the SEC and DOJ investigated HP's German subsidiary for bribery, embezzlement and tax evasion related to a $44.5 million contract with the Office of the Prosecutor General of the Russian Federation.

Akshay Sharma, research director at Gartner who focuses on the networking and service provider space, said the immediate drop in stock will no doubt "hurt" Juniper, but also stressed that these kinds of probes are, unfortunately, fairly common in the tech world.

"Their stock went down 5.7 percent, so that hurts," Sharma told CRN. "But, I mean, Oracle agreed last year to pay $2 million for something similar, IBM agreed to pay $10 million for stuff in South Korea and China. I don't know the details, but, unfortunately, it is the way business is done in some countries."

Juniper's disclosure of the SEC investigation comes just three weeks after the Sunnyvale, Calif.-based company announced the sudden departure of CEO Kevin Johnson. Juniper, which said Johnson plans to retire, has started a search for new CEO.

PUBLISHED AUG. 9, 2013

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