In the minds of some, companies that have resolved Foreign Corrupt Practices Act enforcement actions are bad or unethical companies.
It is a tempting position to take. After all, the FCPA is about bribery and corruption.
However, it is a wrong position to take in many (but certainly not all) instances.
It surprises most people to learn that a company with pre-existing FCPA compliance policies and procedures – and a company otherwise making good faith efforts to comply with the FCPA – can still face legal liability when a non-executive employee or agent nevertheless acts contrary to the company’s pre-existing FCPA compliance and procedures.
And rightfully so. Yet because of respondeat superior principles or the government’s seeming strict liability approach to enforcing the FCPA’s books and records and internal controls provisions, the company is exposed to FCPA liability. Such pre-existing policies and procedures may be relevant to charging decisions or type of resolution vehicle under DOJ / SEC non-binding policy or guidance as well as the ultimate fine amount under the advisory Sentencing Guidelines, but not relevant to liability as a matter of law.
In the minds of some, companies that have resolved FCPA enforcement actions aren’t just bad or unethical, but should be debarred from U.S. government contracts. Indeed, certain bills have been introduced in Congress seeking to debar any company found to be in violation of the FCPA from receiving U.S. government contracts. (See here).
Against this general backdrop, it is interesting to note that the U.S. government recently agreed to provide up “to $2.1 billion to Sanofi and GlaxoSmithKline to fund development and manufacturing of the companies’ experimental Covid-19 vaccine.” (See here). The U.S. government is also working with AstraZeneca and Johnson & Johnson on COVID-19. Specifically, the U.S. government has “invested $1.2 billion in the vaccine being developed by AstraZeneca and University of Oxford” and announced that “it will purchase 100 million doses of the vaccine being developed by the German biotechnology firm BioNTech and the drug giant Pfizer for $1.95 billion.”
A common thread among Sanofi, GlaxoSmithKline, AstraZeneca, Johnson & Johnson and Pfizer is that they have all resolved FCPA enforcement actions.
As highlighted here, in 2018 Sanofi paid approximately $25 million to resolve an FCPA enforcement action focused on employees and agents of the company’s subsidiaries in Kazakstan and various Middle Eastern countries providing things of value to “foreign officials, including healthcare professionals, in order to improperly influence them and increase sales of Sanofi products.”
As highlighted here, in 2016 GlaxoSmithKline coughed up approximately $20 million to resolve an FCPA enforcement action based on employees and agents of its China-based subsidiary and China-based joint venture providing various things of value to healthcare professionals in China.
As highlighted here, in 2016 AstraZeneca paid approximately $5.5 million to resolve an FCPA enforcement action “relating to the interactions of its China and Russia subsidiaries with government officials, the vast majority of whom were health care providers (“HCPs”), at state-owned and state-controlled entities.”
As highlighted here, in 2011 Johnson & Johnson paid approximately $70 million to resolve an FCPA enforcement action focused on business conduct in Greece, Poland, Romania (the enforcement actions also resolved an investigation of Johnson & Johnson subsidiary companies in the United Nations Oil for Food Program in Iraq). Johnson & Johnson is currently under FCPA scrutiny again. (See here).
As highlighted here, in 2012 Pfizer (and Wyeth) paid approximately $60 million to resolve an FCPA enforcement action concerning conduct in numerous countries.
That the U.S. government is working with FCPA violators to combat COVID-19 demonstrates once again the simplistic narrative that companies resolving FCPA enforcement actions are bad or unethical.
To the contrary, many companies that resolve FCPA enforcement actions otherwise win awards of being the most ethical, most admired, or otherwise produce products or services that change the world. (See previous posts here, here and here regarding Ethisphere’s “World’s Most Ethical Companies List,” this post for how such companies have been well-represented on Fortune’s “Most Admired Companies” list and this post for how such companies are well-represented on Fortune’s “Changing the World” list).
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