The Securities and Exchange Commission said today it charged Johnson & Johnson (JNJ) with violating the Foreign Corrupt Practices Act by bribing public doctors in several European countries and paying kickbacks to Iraq to illegally obtain business. J&J 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 Department of Justice today. A resolution of a related investigation by the United Kingdom Serious Fraud Office is anticipated.
The SEC alleges that since at least 1998, subsidiaries of Johnson & Johnson paid bribes to public doctors in Greece who selected J&J surgical implants, public doctors and hospital administrators in Poland who awarded contracts to J&J, and public doctors in Romania to prescribe J&J pharmaceutical products. According to the SEC’s complaint filed in federal court in the District of Columbia, public doctors and administrators in Greece, Poland, and Romania who ordered or prescribed J&J products were rewarded in a variety of ways, including with cash and inappropriate travel. J&J subsidiaries also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program.
“The message in this and the SEC’s other FCPA cases is plain – any competitive advantage gained through corruption is a mirage,” Robert Khuzami, Director of the SEC’s Division of Enforcement said in a statement. “J&J chose profit margins over compliance with the law by acquiring a private company for the purpose of paying bribes, and using sham contracts, off-shore companies, and slush funds to cover its tracks.”
JNJ gained 7 cents, or 0.12%, to $59.55 at 12:30 E.T. in New York Stock Exchange trading.