J&J settles bribery and kickback charges

By @ibtimes on

Johnson & Johnson on Friday agreed to pay $70 million to settle U.S. charges that it paid bribes and kickbacks to win business overseas, the first big drug company to settle since the Obama administration began its scrutiny of the industry more than a year ago.

Johnson & Johnson agreed to pay a $21.4 million fine to settle Justice Department criminal charges and pay more than $48.6 million in disgorgement and interest to settle charges by the Securities and Exchange Commission, the agencies said.

J&J is also expected to resolve a related investigation by the United Kingdom Serious Fraud Office, the SEC said.

The Justice Department announced in November 2009 that it would focus on prosecuting those in the pharmaceutical industry who try to bribe foreign officials for preferential treatment of their products, leading to a wide-ranging probe.

Eli Lilly has previously said that it was under scrutiny by the U.S. government over its compliance with bribery laws in a number of countries including Poland. The company has said it was cooperating with authorities.

Baxter International has also said that it has received a request from the Justice Department and SEC for information about its practices overseas related to U.S. bribery laws and that it was cooperating as well.

Johnson & Johnson shares pared gains after news of the settlement emerged. They were up 3 cents to $59.51 in midday trading on the New York Stock Exchange.

Dating back to 1998, J&J subsidiaries were accused of paying bribes to public doctors in Greece to select its surgical implants and in Romania to prescribe its medicines, earning millions of dollars in profits.

J&J units were also accused of paying bribes to public doctors and hospital administrators in Poland to win contracts and of paying kickbacks to Iraq to win 19 contracts under the U.N.'s Oil for Food Program.

Iraq had demanded that companies pay a 10 percent fee in order to do business with the Saddam Hussein government, Johnson & Johnson said in a statement.

More than four years ago, we went to the (U.S.) government to report improper payments and have taken full responsibility for these actions, J&J Chairman and Chief Executive Officer William Weldon said in a statement.

J&J did not admit or deny the SEC's allegations but acknowledged responsibility in the Justice Department case for the actions of its units, employees and agents who made the improper payments.

Under the settlement, J&J will enter into a deferred prosecution agreement with the Justice Department.

(Additional reporting by Lewis Krauskopf in New York; Editing by Lisa Von Ahn, Phil Berlowitz)

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