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China Investigates Novartis for Possible Foreign Bribery

September 3, 2013 — The U.S. Foreign Corrupt Practices Act (FCPA) makes it a crime to boost business abroad by bribing foreign officials. And the Dodd-Frank Act of 2010 gives tipsters with information about foreign corrupt practices a way to do the right thing. Whistleblowers who notify the Department of Justice (DOJ) or the Securities and Exchange Commission (SEC) concerning FCPA violations may be compensated with significant financial rewards under Dodd-Frank.

Drug Maker Alleged to Have Bribed Chinese Physicians to Boost Sales

A Swiss pharmaceutical company is the target of a probe by Chinese regulatory officials for alleged bribery. Novartis AG (Novartis) is being investigated by the State Administration for Industry and Commerce of China for bribery and corruption related to medical devices and pharmaceutical drugs. Chinese regulators already have two similar bribery investigations underway against other European drug makers: Sanofi, S.A of France and GlaxoSmithKline (GSK) of the United Kingdom.

A former Novartis employee in China is alleged to have offered money to Chinese doctors to boost sales of Novartis drugs in China. After leaving Novartis, the former employee went to the Chinese labor authorities and reported that he had been bribing doctors and other health care providers to increase Novartis’ sales in China. In a later interview with a Chinese business magazine, 21st Century Business Herald, he publicly alleged that Novartis bribes medical providers in China. Novartis then began an internal investigation through its Business Practices Office to look into the allegations.

According to the Wall Street Journal, it is unclear how Novartis made the alleged payments to the Chinese doctors. In the GSK investigation, it is alleged that the sales team was able to make payments to doctors and other medical providers through consulting fees and payments to third-party conference organizers. GSK, however, has alleged that its employees were acting outside the scope of their authority in paying almost $500 million in bribes to Chinese medical providers.

Informants Collaborate With the Government to Stop FCPA Violations

Company insiders are uniquely situated to help put a stop to illegal foreign bribery. If you’re thinking of notifying the SEC about FCPA violations that you’ve uncovered, the qui tam lawyers with Waters & Kraus are committed to protecting your interests under the Dodd-Frank Act. Contact us by email or call our FCPA lawyers at 800.226.9880 to learn more about our anti-bribery practice.

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