Pharmaceutical giant AstraZeneca PLC agreed to pay $5.5 million to settle foreign bribery charges involving foreign officials in China and Russia. The company appears to have been given a break on fines because of its cooperation in the investigation. The fines were levied by the Securities and Exchange Commission (SEC) pursuant to the Foreign Corrupt Practices Act.
According to the SEC’s Cease and Desist Order, AstraZeneca failed to have sufficient internal controls in both Russia and China. This allowed sales staff to bribe healthcare providers in both countries. Because the healthcare systems were publicly run, the bribes can be considered bribery of public officials.
The SEC claims that multiple levels of management were involved in the scheme.
Foreign Bribery in China
According to SEC documents, AstraZeneca sales staff “made numerous improper payments in
cash, gifts and other items to [government healthcare providers] as incentives to purchase or prescribe AstraZeneca pharmaceuticals.”
To generate cash for the illegal payments, the sales staff would submit fake expense receipts which would then be knowingly approved by managers. The scheme was designed to hide any paper trail of the bribes. The SEC also says that the company would pay some practitioners speaking fees even though the speaking engagements were totally fabricated and never took place.
When the Chinese government began asking questions about AstraZeneca’s operations in 2008, the SEC says the company “made payments in cash to the local officials to get reductions or
dismissals of proposed financial sanctions.”
Foreign Bribery in Russia
The SEC claims that AstraZeneca’s Russian subsidiary operated much the same way as their China counterparts. Once again the scheme appears to have extended through management.
Foreign Corrupt Practices Act (FCPA) and Whistleblower Awards
U.S. public companies or foreign companies that issue or market securities in the U.S. are subject to the Foreign Corrupt Practices Act. That law makes it illegal for companies to bribe foreign officials. Even though AstraZeneca is headquartered in London, its shares are available for sale on the New York Stock Exchange. That makes the company subject to the U.S. anti-bribery laws.
Companies that violate the FCPA can be prosecuted in the U.S. Typically the SEC handles FCPA violations and levies fines.
The SEC has a whistleblower program that pays cash awards to people with inside knowledge of securities violations or FCPA violations.
In addition to paying fines and penalties, AstraZeneca was ordered to cease and desist from any further violations. The SEC found that the company cooperated in the investigation and has already made substantial efforts to prevent future problems.
MahanyLaw – FCPA Whistleblower Lawyers
If you have inside knowledge of foreign bribery or other corrupt practices or know of companies with inaccurate books and records, give us a call. We have helped our whistleblower clients collect tens of millions of awards. You could be next.
The SEC whistleblower program has substantial anti-retaliation provisions and has a good track record of protecting the identity of whistleblowers. We can help you collect the maximum award and protect you from retaliation if you are still employed by the wrongdoer.