Pharmaceutical major Pfizer Inc. (NYSE:PFE) has been reported to have agreed to pay $60 million to the federal government, in settlement of alleged charges that its employees were involved in the bribery of overseas officials and prescribing doctors in Europe and in Asia, in order to generate business.
Pfizer Inc. (NYSE:PFE) had been charged under the Foreign Corrupt Practices Act, which bars listed American companies from bribery in foreign countries.
After Wal-Mart Stores, Inc. (NYSE:WMT) was raked over the coals for its alleged role in suppressing an internal inquiry into Mexican bribery in 2005, the Foreign Corrupt Practices Act is now taken very seriously by American corporations. (Read more on the Wal-Mart scandal here on ValueWalk.) The Securities and Exchange Commission, last year, charged Johnson & Johnson (NYSE:JNJ) with violating the Foreign Corrupt Practices Act (FCPA), by bribing public doctors in several European countries, and paying kickbacks to Iraq to illegally obtain business. Johnson & Johnson (NYSE:JNJ) agreed to settle the SEC’s charges by paying more than $48.6 million in disgorgement and prejudgment interest. J&J also agreed to pay a $21.4 million fine to settle parallel criminal charges announced by the U.S. Department of Justice (DOJ).
The SEC has accused Pfizer’s foreign subsidiaries of bribing foreign health care officials across China, Italy, Russia, Croatia, and certain other countries in Eastern Europe, in order to win business, and thereafter to cloak the payments by inappropriate accounting.
“Pfizer subsidiaries in several countries had bribery so entwined in their sales culture, that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit and cited in the SEC’s press release. “These charges illustrate the pitfalls that exist for companies that fail to appropriately monitor potential risks in their global operations.”
The $60 million settlement comprises $18.6 million account Wyeth, the drug-maker acquired by Pfizer in 2009, $26.3 million by Pfizer, and $15 million for Pfizer’s HCP subsidiary.
“The actions which led to this resolution were disappointing, but the openness and speed with which Pfizer voluntarily disclosed and addressed them reflects our true culture, and the real value we place on integrity and meeting commitments,” said Amy Schulman, executive vice president and general counsel for Pfizer in the company statement.