Novartis to pay $346 million to settle U.S. charges over alleged FCPA violations


Novartis AG, a global pharmaceutical company based in Switzerland, reached an out-of-court settlement with U.S. regulators to resolve all pending lawsuits alleging that its subsidiaries violated the Foreign Corrupt Practices Act (FCPA).

Under the settlement, the company’s current subsidiary Novartis Hellas S.A.C.I. and its former subsidiary Alcon Pte. Ltd. agreed to pay a total of $346.7 million to resolve the FCPA lawsuits.

Novartis Hellas and Alcon will pay $233.9 million in criminal monetary penalties to the U.S. Department of Justice (DOJ) and $112.8 million (including disgorgement of $92.3 million and prejudgment interest of $20.5 million) to the U.S. Securities and Exchange Commission (SEC).

In a statement, Novartis General Counsel Shannon Thyme Klinger said, “We are pleased that all outstanding FCPA investigations into the company are now closed. Today’s settlements represent another milestone in our commitment to resolving legacy compliance issues and ensuring that Novartis truly lives its values. We have implemented and continue to implement initiatives to ensure we operate with the same high ethical values wherever we do business, and we remain focused on building trust with society.”

Alleged bribery scheme by Novartis Hellas and Alcon

The DOJ conducted an investigation and found that as far back as 2012 Novartis Hellas and Alcon engaged in a scheme to bribe health professionals in Greece, and Vietnam.

The Justice Department also found that the current and former Novartis subsidiaries conducted a scheme to falsely record improper payment related to the bribery.

The DOJ charged Novartis Greece with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the books and records provision of the FCPA.

The Justice Department also charged Alcon with conspiracy to violate the books and records provision of the FCPA.

“Novartis AG’s subsidiaries profited from bribes that induced medical professionals, hospitals, and clinics to prescribe Novartis-branded pharmaceuticals and use Alcon surgical products, and they falsified their books and records to conceal those bribes,” said Assistant Attorney General Brian Benczkowski of the DOJ’s Criminal Division.

On the other hand, the SEC launched a parallel investigation and determined the global pharmaceutical company’s current and former subsidiary engaged in schemes to make improper payments or to provide benefits to public and private healthcare providers in South Korea, Vietnam, and Greece.

Additionally, the Commission found that Novartis lacked sufficient internal accounting controls with its Alcon business in China.

The SEC charged the global pharmaceutical company with violations of the books and records and internal accounting controls provisions of the FCPA.

SEC Enforcement Division FCPA Unit Chief Charles Cain commented, “Poor control environments are fertile soil for malfeasance. As illustrated by Novartis’ misconduct, weaknesses in one part of the business can often serve as a harbinger of larger unaddressed problems.”