This is the third time FCPA Professor has highlighted this specific topic.
The prior two posts (here and here) were in connection with FCPA enforcement actions against healthcare companies Johnson & Johnson and Pfizer and the “enhanced compliance obligations” imposed upon the companies in resolving an FCPA enforcement action.
In last week’s FCPA enforcement action against Bristol-Myers (BMS), the SEC also imposed enhanced compliance obligations on the company as a condition of settlement.
Specifically, the SEC order requires BMS tp “report to the Commission periodically, at no less than nine-month intervals during a two-year term, the status of its FCPA and anticorruption related remediation and implementation of compliance measures.”
The order also requires BMS to “undertake two follow-up reviews and submit written reports relating to [its] remedial efforts to devise and maintain policies and procedures reasonably designed to detect and prevent violations of the FCPA and other applicable anticorruption laws.”
Are the post-enforcement action requirements imposed on BMS really necessary?
After all, in the same order, under the heading “Remedial Efforts,” the SEC stated:
“BMS has implemented significant measures to enhance its anti-bribery and general compliance training and policies and to strengthen its accounting and monitoring controls relating to interactions with HCPs, including travel and entertainment expenses, meetings, sponsorships, grants, and donations funded by BMS China. BMS took numerous steps to improve the internal controls and compliance program at BMS China. Examples include a 100% pre-reimbursement review of all expense claims; the implementation of an accounting system designed to track each expense claim, including the request, approval, and payment of each claim; and the retention of a third-party vendor to conduct surprise checks at events sponsored by sales representatives. Additionally, BMS terminated over ninety employees, and disciplined an additional ninety employees, including sales representatives and managers of BMS China, who failed to comply with or sufficiently supervise compliance with relevant policies. In addition, BMS replaced certain BMS China officers as part of an overall effort to enhance “tone at the top” and a culture of compliance. Further, BMS revised the compensation structure for BMS China employees by reducing the portion of incentive-based compensation for sales and distribution, eliminated gifts to HCPs, implemented enhanced due diligence procedures for third-party agents, implemented monitoring systems for speaker fees and third-party events, and incorporated risk assessments based on data analytics into its compliance program.”
Again, are the post-enforcement action requirements imposed on BMS really necessary?
Or is this another example of a boundless and unconstrained government required transfer of shareholder wealth to FCPA Inc.?
Such post-enforcement action reporting obligations are, of course, lucrative for FCPA Inc. Hence one of the reasons you probably do not see those in the industry raising concerns about the emerging trend of “enhanced compliance obligations.”
Yet such concerns should be raised and have been raised here for a third time.
For additional reading about the Johnson & Johnson and Pfizer post-enforcement action “enhanced compliance compliance obligations” see “FCPA Ripples.”