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Harry Cassin
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Bristol-Myers Squibb pays $14 million to resolve China FCPA offenses

The Securities and Exchange Commission said Monday that Bristol-Myers Squibb agreed to settle charges that its joint venture in China made cash payments and provided other benefits to health care providers at state-owned and state-controlled hospitals in exchange for prescription sales.

The New York-based pharma will pay more than $14 million to settle the SEC’s finding that it violated the Foreign Corrupt Practices Act and made more than $11 million in profits from its misconduct.

The SEC resolved the enforcement action through and internal, administrative order and didn’t go to court.

“Bristol-Myers Squibb lacked effective internal controls over interactions with health care providers at BMS China, its majority-owned joint venture,” the SEC said. 

Between 2009 and 2014, BMS China sales representatives tried to win and increase business by giving health care providers cash, jewelry and other gifts, meals, travel, entertainment, and sponsorships for conferences and meetings. 

“BMS China inaccurately recorded the spending as legitimate business expenses in its books and records, which were then consolidated into the books and records of Bristol-Myers Squibb,” the SEC said.

The SEC’s order found that Bristol-Myers Squibb violated the FCPA’s internal controls and recordkeeping provisions. 

Without admitting or denying the findings, the company consented to the order. It agreed to disgorge to the SEC $11.4 million of profits plus prejudgment interest of $500,000, and pay a civil penalty of $2.75 million.

Among the findings in the SEC’s order:

  • Bristol-Myers Squibb failed to respond effectively to red flags indicating that sales personnel provided bribes and other benefits to generate sales from health care providers in China.
  • Bristol-Myers Squibb did not investigate claims by certain terminated employees of BMS China that faked invoices, receipts, and purchase orders were widely used to fund improper payments to health care providers.
  • Bristol-Myers Squibb was slow to remediate gaps in internal controls over interactions with health care providers and monitor potential inappropriate payments to them that were identified repeatedly in annual internal audits of BMS China between 2009 and 2013.

Bristol-Myers Squibb agreed to report to the SEC for two-years on the status of its remediation and implementation of FCPA and anti-corruption compliance measures.

Kara Brockmeyer, chief of the SEC’s FCPA enforcement unit, said: “Bristol-Myers Squibb’s failure to institute an effective internal controls system and to respond promptly to indications of significant compliance gaps at its Chinese joint venture enabled a widespread practice of providing corrupt inducements in exchange for prescription sales to continue for years.”

Bristol-Myers Squibb Company trades on the NYSE under the symbol BMY.

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The SEC’s Securities Exchange Act of 1934 Release No. 76073 and Administrative Proceeding File No. 3-16881 In the Matter of Bristol-Myers Squibb Company dated October 5, 2015 is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. I do not understand- Why did not the SEC charge BMS with the FCPA's anti-bribery provision, but only based on the books and records provision? Employees of a Sino-American BMS JV, which is controlled by BMS, offered a variety of benefits to HCPs with a corrupt intent, which apparently violated the anti-bribery requirement, and according to the agency principle, BMS should be liable for its JV's FCPA violation. Did I miss anything?

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