Settlements

ST-475
Novartis AG / Shanghai Novartis Trading Ltd (aka Sandoz China) and Beijing Novartis Pharma Co. Ltd.
Novartis AG
United States
Securities and Exchange Commission
China
2016
3/26
Unknown
Legal Person
Civil
Cease and Desist Order
Disgorgement of Profits; Prejudgment Interest; Civil Penalty
$25,000,000
$21,500,000
$1,500,000
$2,000,000
$0
NA
Art.16
Art. 1, Art. 2, Art. 8
Falsification of Books and Records, Internal Controls Violations
No admission or denial of alleged offenses
Yes
According to the US Securities and Exchange Commission Press Release, "Novartis AG has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) when its China-based subsidiaries engaged in pay-to-prescribe schemes to increase sales. An SEC investigation found that employees of two China-based Novartis subsidiaries gave money, gifts, and other things of value to health care professionals, which led to several million dollars in sales of pharmaceutical products to China’s state health institutions. The schemes, which lasted a period of years, involved certain complicit managers within Novartis’ China based subsidiaries. Novartis failed to devise and maintain a sufficient system of internal accounting controls and lacked an effective anti-corruption compliance program to detect and prevent these schemes. As a result, the improper payments were not accurately reflected in Novartis’ books and records." (Source: US Securities and Exchange Commission, Litigation Release and In re: Novartis AG, Administrative Proceeding File No. 3-17177, March 23, 2016.)