The pharmaceutical giant Eli Lilly & Co. announced that it has reached a settlement with the U.S. Securities and Exchange Commission over accusations that the company's international operations committed bribery. The company will pay nearly $30 million dollars to settle the federal claims against it, which include charges that executives were aware of bribery on its behalf in at least one country for five years without taking action. The case may illustrate how tricky it can be for New York companies to do business in countries where bribery is a common practice.
According to the SEC, Eli Lilly subsidiaries in four countries -- Brazil, China, Poland and Russia -- made payments to government officials that were in violation of the Foreign Corrupt Practices Act. The investigation goes back many years and includes activities in those countries from 1994 through 2009.
The SEC appears to have been especially concerned about Lilly's Russian subsidiary. The government claims that Lilly knew about possible bribes to officials in that country for more than five years without moving to stop the practice.
As part of the settlement, Lilly will pay a penalty of $8.7 million, prejudgment interest of $6.74 million and disgorgement of $14 million. In exchange, the drug maker will not admit violating the federal anti-international bribery law. In a statement, the company's chief ethics and compliance officer said that Lilly has tightened up its compliance procedures since the time covered in the case.
While most business owners in New York know that bribing foreign government officials is against the law, what constitutes a bribe can sometimes be unclear. Consulting with a business litigation attorney may help businesses stay competitive without breaking the law.
Source: The Wall Street Journal, "Lilly to Pay $29.4 Million to Settle SEC Allegations," Melodie Warner, Dec. 20, 2012