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Alexion Pharmaceuticals Resolves $21.5 Million Enforcement Action

alexionsoli

Yesterday, the SEC announced that Alexion Pharmaceuticals (a company that has been under scrutiny since mid-2015) agreed to approximately $21.5 million to resolve an enforcement action based on the actions of foreign subsidiaries involving the company’s primary drug Soliris.

The conduct at issue focused on Alexion Illac Ticarent Limited Sirketi (Alexion Turkey), Alexion Pharma OOO (Alexion Russia), Alexion Pharma Brazil and Alexion Pharma Colombia SAS (all wholly-owned subsidiaries whose books and records were consolidated into Alexion’s financial statements).

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Novartis Joins The Repeat Offender Club – This Time Paying Approximately $347 Million To Resolve An FCPA Enforcement Action

Novartis

What happens when the Greek, Swiss, and South Korean subsidiaries of a Swiss company engage in improper conduct in Greece, Vietnam and South Korea? Why of course, approximately $345 million flows into the U.S. treasury.

Yesterday, Novartis joined the long and growing list of FCPA repeat offenders as the DOJ and SEC announced (see here and here) a combined approximate $347 million enforcement action. (As highlighted in this prior post, in 2016 Swiss pharmaceutical company Novartis coughed up $25 million to resolve a SEC FCPA enforcement action focused on the conduct of its indirect Chinese subsidiaries).

Yesterday’s enforcement action included a DOJ component (in which the company agreed to pay approximately $234 million) and a SEC component (in which the company agreed to pay approximately $113 million).

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Strict Liability For Subsidiary Conduct

oilstates

[This post is part of a periodic series regarding “old” FCPA enforcement actions]

Issuer strict liability for subsidiary conduct is a dubious prong of Foreign Corrupt Practices Act enforcement. However, as highlighted in this post concerning a 2006 enforcement action against Oil States International, it has long been an aspect of FCPA enforcement.

In 2006, the SEC brought this administrative action against Oil States International (a specialty provider to oil and gas drilling companies). The conduct at issue was based entirely on the actions of employees of a branch office in Eastern Venezuela of Hydraulic Well Control LLC, a subsidiary of Oil States. According to the SEC, HWC Venezuela contributed approximately 1% of Oil States’ consolidated revenues during the relevant time period.

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Eni Joins The Repeat Offender Club – This Time Resolves A $24.5 Million SEC FCPA Enforcement Action

eni

As highlighted in this prior post, in 2010 ENI S.p.A (an Italy-based oil and gas company with American Depositary Shares listed on the New York Stock Exchange) along with its wholly-owned subsidiary Snamprogetti resolved a $125 million SEC Foreign Corrupt Practices Act enforcement action concerning conduct in Nigeria.

On Friday, the SEC announced that ENI resolved another FCPA enforcement action – this one a $24.5 million enforcement action concerning conduct in Algeria by Saipem S.p.A. (a minority-owned and controlled subsidiary during the relevant time period). The conduct at issue in the enforcement action occurred 10 – 13 years ago.

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Assessing The SEC’s Individual Accountability Rhetoric

assessment

In announcing the Foreign Corrupt Practices Act enforcement action against Asante Berko earlier this week, the Chief of the SEC’s FCPA Unit stated: “individual accountability remains a key component to our FCPA enforcement efforts.” (See here for the prior post).

Such statements by FCPA enforcement officials are commonplace.

But what do the facts show? As highlighted below, since January 1, 2018 the SEC has brought 28 corporate FCPA enforcement actions against issuer companies. As the co-head of the SEC’s Enforcement Division rightly stated: “Of course, companies cannot engage in bribery without the actions of culpable individuals.” However, approximately 90% of these issuer enforcement actions have lacked, at least at present, any related SEC enforcement action against an individual. In other words, there has been no individual accountability for these alleged FCPA violations.

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