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SEC v. Eli Lilly and Company

 
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Eli Lilly and Company
:
SEC Civil
:
December 20, 2012
:
SEC v. Eli Lilly and Company
:
SEC v. Eli Lilly and Company, 12-cv-2045 (D.D.C. 2012)
:
Some of the bribes were allegedly made through payments to a charitable foundation in Poland called the Chudow Castle Foundation. Illicit payments to the Chudow Castle Foundation was also alleged in the SEC enforcement action against Schering-Plough in 2004.
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Healthcare-Pharmaceutical
:
Brazil, China, Poland, Russia
:
1994; 1995; 1996; 1997; 1998; 1999; 2000; 2001; 2002; 2003; 2004; 2005; 2006; 2007; 2008; 2009
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Officials at regional government health authorities in Poland; Government-employed physicians in China; Brazilian government officials; Member of Russia's Parliament and other government officials in Russia.
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Eli Lilly and Company, an Indiana corporation, is a pharmaceutical manufacturer that markets products in over 143 countries.

According to the SEC’s complaint, between 1994 and 2009, Eli Lilly’s subsidiaries made improper payments to government officials in China, Brazil, Poland, and Russia, to win sales contracts and gain other business advantages.

In China, employees at Eli Lilly’s Chinese subsidiary (“Lilly-China”) allegedly submitted false expense reports to purchase gifts and entertainment for government-employed physicians to encourage physicians to look favorably upon Lilly and prescribe Lilly products.

In Brazil, Eli Lilly’s Brazilian subsidiary (“Lilly-Brazil”) distributed drugs through third-party distributors, granting them a discount depending on the distributor’s anticipated sale. In 2007, Lilly-Brazil allegedly granted an unusually large discount for two of the distributor’s purchases of a Lilly drug, which the distributor then sold to the government of one of the Brazilian states. The distributor used a portion of the purchase price to bribe government officials from the Brazilian state so that the state would purchase the product. The Lilly-Brazil employees that authorized the discount allegedly knew of this arrangement.

In Poland, Eli Lilly’s Polish subsidiary made payments to a small charitable foundation that was founded and administered by the head of one of the regional government health authorities at the same time that the subsidiary was seeking the official’s support for placing Lilly drugs on the government reimbursement list.

In Russia, Eli Lilly’s Russian subsidiary (“Lilly-Russia”) made payments to offshore entities for alleged “marketing services” to induce pharmaceutical distributors and government entities to purchase Lilly’s drugs. At least one of the offshore entities was owned by a government officials, and another was owned by a person closely associated with an important member of Russia’s parliament.
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Civil penalty, Civil Settlement, Disgorgement, Injunction/Cease and desist, Prejudgment Interest
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Eli Lilly agreed to pay disgorgement of $13,955,196, prejudgment interest of $6,743,538, and a penalty of $8.7 million for a total payment of $29,398,734. Without admitting or denying the allegations, Lilly consented to the entry of a final judgment permanently enjoining the company from violating the anti-bribery, books and records, and internal controls provisions of the FCPA.
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29,398,734
:
0
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Issuer
:
U.S.
:
Contract Procurement/Retention, Other Business Advantage
:
Not stated.
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Cash, Charitable contribution, Entertainment, Gifts, Meals
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Direct, Sales Agent/Consultant, Subcontractor, Subsidiary Company
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Not stated.
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Brazil, China, Cyprus, Poland, Russia
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No
:
No