Novartis AG and subsidiaries to pay nearly USD 345 million to resolve FCPA violations

On 25 June 2020, Swiss multinational pharmaceutical and healthcare company Novartis AG, its subsidiary Novartis Hellas S.A.C.I. and Novartis’ former subsidiary Alcon Pte Ltd reached settlements with the U.S. SEC to resolve charges under the books and records, internal controls and anti-bribery provisions of the Foreign Corrupt Practices Act (hereinafter “FCPA”).

According to the case documents, since 2007 Novartis and its affiliates had bribed public and private healthcare providers in South Korea, Vietnam and Greece to boost prescriptions and sales of their products, falsifying the payments as legitimate fees. In addition, between 2013 and 2015 Alcon’s business in China had failed to maintain effective internal accounting controls to curtail the use of creative “equipment financing arrangements” whose terms were not sufficiently reflected in the written documentation.

Under the terms of the SEC’s cease-and-desist order, Novartis will report for three years to the SEC on its compliance and remediation efforts, and will pay a total of approximately USD 112.8 million, including disgorgement of USD 92.3 million and prejudgment interest of USD 20.5 million. No civil penalty was imposed based on the DOJ’s imposition of criminal fines on its subsidiaries. Novartis Hellas and Alcon entered separately into deferred prosecution agreements with the DOJ, including criminal penalties of more that USD 233 million in criminal fines. The companies received a 25 percent reduction off of the U.S. Sentencing Guidelines range based on their cooperation with the investigation.

During the investigation, the SEC received assistance from the U.S. DOJ Criminal Division’s Fraud Section, the U.S. Attorney’s Office for the District of New Jersey, the FBI, the Swiss Financial Market Supervisory Authority and the U.K. Financial Conduct Authority.

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