The Wall Street Journal reports that Johnson & Johnson has agreed to pay the U.S. and U.K. governments more than $77 million in fines for bribes offered to doctors in three European countries and kickbacks paid to secure business from former Iraqi dictator Saddam Hussein. Johnson & Johnson may avoid further criminal charges if it meets U.S. anti-foreign bribery law compliance for three years.
SEC has tracked suspicious activity since 1998
In the wake of several Johnson & Johnson product recalls – including Tylenol – the $77 million settlement comes at the worst possible time for the company. The U.S. Securities and Exchange Commission alleges that Johnson & Johnson and some of its subsidiaries bribed doctors in Greece to use its surgical implants, in Poland to award medical contracts and in Romania to prescribe Johnson & Johnson pharmaceutical products. Nineteen separate J&J contracts with Iraq that are administered by the United Nations Oil for Food Program have also come into question by authorities.
In total, Johnson & Johnson will pay $48.6 million to the SEC, a $21.4 million fine to the U.S. Justice Department as a criminal penalty and 4.8 million pounds ($7.8 million) to the U.K. Serious Fraud Office.
Pharmaceutical companies are on notice
The Johnson & Johnson bribery case has prompted the U.S. government to pay additional attention to large-scale corporate bribery. U.S. drug makers like Bristol-Myers Squibb, Eli Lilly & Co. and Merck & Co. have all attracted attention recently because of allegations of less-than-ethical behavior.
Johnson & Johnson CEO William Weldon said via a press release that while his company did bring violations to light with the government, “unacceptable conduct” has occurred, which is entirely shameful.
“More than four years ago, we went to the government to report improper payments and have taken full responsibility for these actions,” he said. “We have undertaken significant changes since then to improve our compliance efforts, and we are committed to doing everything we can to ensure this does not occur again.”
Sources
Securities and Exchange Commission: http://sec.gov/news/press/2011/2011-87.htm
Wall Street Journal: http://online.wsj.com/article/BT-CO-20110408-710260.html
Is $70 million enough for Johnson & Johnson making deals with Hussein?
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