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SEC v. Schering-Plough Corporation

 
:
Schering-Plough Corp.
:
SEC Civil
:
June 9, 2004
:
SEC v. Schering-Plough Corporation
:
SEC v. Schering-Plough Corp., No. 04-0945, (D.D.C. 2004)
:
Although some commentators have criticized this proceeding as overreaching by the SEC, it should be noted that the "charitable contributions" in this proceeding were falsely justified for internal approval as supporting medical research, but were made to a foundation that restored local historic buildings under the direction of an official responsible for making purchasing decisions regarding medical equipment from the company. Such treatment clearly raises books and records issues.
:
Healthcare-Pharmaceutical
:
Poland
:
1999; 2000; 2001; 2002
:
Director of the Silesian Health Fund, a regional government authority in Poland, who was also the founder and President of Chudow Castle Foundation
:
Schering-Plough settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint.

Between February 1999 and March 2002, Schering Plough Poland paid $75,860 to the Chudow Castle Foundation, a charitable organization, in order to induce the Foundation's president, who was also a Polish government official, to influence the purchase of Schering-Plough's pharmaceutical products. None of the payments to the charity was accurately reflected in Schering-Plough's books and records and Schering-Plough's system of internal accounting failed to prevent or detect the improper payments.

The President and founder of the charitable organization receiving the payments was also the Director of the Silesian Health Fund, which is a regional government health authority. While the payments were characterized as charitable contributions and were in fact made to a bona fide charity, Schering-Plough made them to induce the official, who was the head of both the charity and the health authority, to provide money for the purchase of Schering-Plough's pharmaceutical products by hospitals and other entities through the allocation of health fund resources. Employees at that time were not required to determine prior to making charitable donations whether government officials were affiliated with proposed recipients, thus the Director of the Silesian Health Fund's relationship to the foundation was never considered as a potential FCPA issue.
:
Books and records (Issuer), Internal controls (Issuer)
:
Civil penalty, Compliance Monitor, Injunction/Cease and desist
:
Civil penalty of $500,000
:
500,000
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
Not stated.
:
Charitable contribution
:
Direct
:
75,860
:
Poland
:
No
:
No