Drugmaker Novartis AG on Wednesday agreed to pay more than US$25 million to the US government to settle civil charges that it bribed healthcare professionals in China to boost sales there, the US Securities and Exchange Commission (SEC) said.
The commission said violations occurred from 2009 to 2013.
Novartis settled the charges of a US law barring bribery of foreign officials without admitting or denying them, the commission said.
Novartis said the allegations involved in the settlement largely predate compliance measures it has since put in place.
“We believe these measures, which we review and update on an ongoing basis, address the issues raised by the SEC and reflect a broader initiative by Novartis to align and enhance our compliance standards globally,” company spokesman Eric Althoff said in an e-mailed statement.
The commission said that Novartis’ China-based units tried to mask the bribes by recording them on the corporate books as legitimate expenses for travel and entertainment, conferences, lecture fees, marketing events, educational seminars and medical studies.
In one instance in 2011, sales representatives allegedly submitted fake receipts for about US$8,100 as part of their employee expense reimbursement requests.
The funds were used to entertain and provide various gifts.
Other instances cited in the commission’s case entail efforts by the company to hire Chinese travel companies to arrange trips, meals and accommodations for healthcare professionals in connection with educational events.
Many of these events were more recreational than educational, the commission said. One trip, for example, included an excursion to Niagara Falls.
The commission said that Novartis failed to devise and maintain an effective system of internal accounting controls.
The agency added that Novartis cooperated with its investigation and conducted its own “expansive review” into the matter.
“Novartis promptly took remedial steps to improve its internal controls at Novartis China,” the commission said, adding that the firm had fired or disciplined employees, suspended vendor relationships and overhauled its policies.
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