SEC v. Eli Lilly and Company (D.D.C. 2012)
Case Details
- Case Name
- SEC v. Eli Lilly and Company (D.D.C. 2012)
- Countries
- Brazil, China, Poland, Russia
- Foreign Official
- Director of Polish government health authority; Government-employed healthcare providers and other government officials in China; Government officials in Brazil; Member of Russia’s Parliament and other government officials in Russia.
- Date of Conduct
-
1994 to 2009
- Nature of Business
- Eli Lilly and Company, an Indiana corporation, is a pharmaceutical manufacturer that markets products in over 143 countries. Its common stock is registered with the SEC pursuant to Section 12(b) of the Exchange Act and is traded on the New York Stock Exchange.
- Influence to be Obtained
- According to the SEC’s complaint, between 1994 and 2009, Eli Lilly’s subsidiaries made improper payments to government officials in China, Brazil, Poland, and Russia to win sales contracts and gain other business advantages.
In China, employees at Eli Lilly’s Chinese subsidiary (“Lilly-China”) allegedly submitted false expense reports to purchase gifts and entertainment for government- employed physicians to encourage physicians to look favorably upon Lilly and prescribe Lilly products.
In Brazil, Eli Lilly’s Brazilian subsidiary (“Lilly-Brazil”) distributed drugs through third-party distributors, granting them a discount depending on the distributor’s anticipated sale. In 2007, Lilly-Brazil allegedly granted an unusually large discount for two of the distributor’s purchases of a Lilly drug, which the distributor then sold to the government of one of the Brazilian states. The distributor used a portion of the purchase price to bribe government officials from the Brazilian state so that the state would purchase the product. The Lilly-Brazil employees that authorized the discount allegedly knew of this arrangement.
In Poland, Eli Lilly’s Polish subsidiary made payments to a small charitable foundation that was founded and administered by the head of one of the regional government health authorities at the same time that the subsidiary was seeking the official’s support for placing Lilly drugs on the government reimbursement list.
In Russia, Eli Lilly’s Russian subsidiary (“Lilly-Russia”) made payments to offshore entities for alleged “marketing services” to induce pharmaceutical distributors and government entities to purchase Lilly’s drugs. At least one of the offshore entities was owned by government officials, and another was owned by a person closely associated with an important member of Russia’s parliament.
- Enforcement
- On December 20, 2012, the SEC filed a complaint against Eli Lilly, alleging violations of the anti-bribery, books-and-records, and internal controls provisions of the FCPA. Eli Lilly agreed to pay disgorgement and prejudgment interest of approximately $20.7 million and a penalty of $8.7 million. Without admitting or denying the allegations, Lilly consented to the entry of a final judgment permanently enjoining the company from violating the FCPA. Lilly also agreed to comply with certain undertakings, including the retention of an independent consultant to review and make recommendations about its foreign corruption policies and procedures.
- Amount of the Value
- Not Stated
- Amount of Business Related to Payment
- Not Stated
- Intermediary
- Subsidiaries; Third-party Distributors.
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 29,398,734
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 29,398,734
Defendants
Eli Lilly and Company
- Citation
- SEC v. Eli Lilly & Co., No. 1:12-cv-02045 (D.D.C. Jan. 02, 2013).
- Other Statutory Provision
- None
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
