Big pharma Eli Lilly said in an SEC filing Thursday that the DOJ has closed its FCPA investigation of the company.
In late 2012, Lilly resolved civil FCPA charges brought by the SEC. The company paid $29.4 million for offenses related to bribes to government officials in Russia, Brazil, China, and Poland. Lilly agreed to the settlement without admitting or denying the SEC’s allegations.
The SEC launched its investigation in mid 2003. The probe first focused on sales practices at Lilly’s subsidiary in Poland but expanded to other countries. The DOJ eventually launched a parallel investigation.
Lilly said it received word of the DOJ declination in January.
The SEC alleged in its 2012 civil complaint that Lilly’s subsidiary in Russia used offshore “marketing agreements” to pay millions of dollars to third parties chosen by government customers or distributors.
Even after Lilly learned about possible FCPA violations in Russia and elsewhere, it didn’t stop the offshore marketing agreements for more than five years, the SEC alleged.
Other subsidiaries in Brazil, China, and Poland also made improper payments to government officials or third-parties associated with them, the SEC said.
The SEC said Lilly’s violations dated from 1994 through 2009.
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Here’s the FCPA disclosure from Eli Lilly and Company in its Form 10-K (Annual Report) filed with the SEC on February 19, 2015:
In August 2003, we received notice that the staff of the Securities and Exchange Commission (SEC) was conducting an investigation into the compliance by Lilly’s Polish subsidiary with the U.S. Foreign Corrupt Practices Act of 1977 (FCPA). Subsequently, we were notified that the SEC had expanded its investigation to other countries and that the Department of Justice (DOJ) was conducting a parallel investigation. In December 2012, we announced that we had reached an agreement with the SEC to settle its investigation. The settlement relates to certain activities of Lilly subsidiaries in Brazil, China, Poland, and Russia from 1994 through 2009. Without admitting or denying the allegations, we consented to pay a civil settlement amount of $29.4 million and agreed to have an independent compliance consultant conduct a 60-day review of our internal controls and compliance program related to the FCPA. In January 2015, the DOJ advised us that they have closed their investigation into this matter.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.