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Novartis to settle SEC's China bribe case for US$25m
[HONG KONG] Novartis AG agreed to pay US$25 million to settle a US Securities and Exchange Commission case that claimed the Swiss drugmaker violated the Foreign Corrupt Practices Act by paying bribes to health professionals in China to increase sales from 2009 to 2013.
The SEC issued a cease-and-desist order late Wednesday saying Novartis submitted a settlement offer and the agency has accepted it. The company's payment includes US$2 million in a civil penalty and US$1.47 million in interest, according to the order posted on the SEC's website. Novartis didn't admit or deny the SEC's claims.
E-mails and telephone calls to Basel, Switzerland-based Novartis weren't returned outside operating hours in Europe, and calls to its office in China weren't answered.
The SEC order, detailed a number of violations, where Novartis employees provided items of value to health-care professionals in China, under the supervision of complicit managers. The SEC cited examples of how the company improperly recorded as legitimate expenses payments employees made for travel and entertainment, conferences, lecture fees, marketing events, educational seminars and medical studies.
Novartis began an expansive review of its relationships with travel and event planning vendors in China "in connection with the SEC staff's investigation and in response to media reports concerning a competitor in August 2013," according to the SEC order.
The majority of health-care professionals in China work at government-run public hospitals. In Sept 2014, a Chinese court fined London-based GlaxoSmithKline Plc 297 million pounds (S$574 million), capping a 15-month investigation into its sales practices in the country, which included allegations that it bribed doctors.