SEC v. Wyeth LLC (D.D.C. 2012)

• Case Name
• SEC v. Wyeth LLC (D.D.C. 2012)

• Date Filed
• 08/29/2012

• Enforcement Agency
• SEC

• Countries
• China, Indonesia, Pakistan, Saudi Arabia

• Foreign Official
• Employees (including doctors) at state-owned hospitals in China, Indonesia, and Pakistan; Saudi Arabian customs official.

• Date of Conduct
• 2005 to 2010

• Nature of Business
• Wyeth LLC is a pharmaceutical company headquartered in New Jersey and incorporated in Delaware.  Before its acquisition by Pfizer, Wyeth’s securities were registered with the SEC and its common stock traded on the New York Stock Exchange.  In 2009, during Wyeth’s alleged misconduct, the company was acquired by Pfizer, Inc. and became a wholly owned subsidiary of Pfizer.  The DOJ’s action against Pfizer H.C.P. (and the related SEC action against Pfizer Inc.) is entirely unrelated to the conduct alleged by the SEC in this action.

• Influence to be Obtained
• According to a complaint filed by the SEC, Wyeth’s subsidiaries in China, Indonesia, Pakistan, and Saudi Arabia allegedly made improper payments to foreign officials (including employees of state-owned hospitals) to procure business, which resulted in inaccurate books and records.  The improper payments were falsely recorded as promotional expenses, “Miscellaneous Selling Expenses,” “Trade Allowances,” “Entertainment,” and “Give Aways and Gifts.”
  
  In China, Wyeth’s indirect majority-owned subsidiary, Shanghai Wyeth Nutritional Co., Ltd., provided cash payments to Chinese state-owned hospitals and healthcare providers employed by the Chinese government.  The payments were made to influence the healthcare providers’ recommendations of Wyeth nutritional products to patients, to ensure that Wyeth products were made available to new mothers at the hospitals, and to obtain information on new births that could be used for marketing purposes.  The payments were funded with the help of collusive travel agencies and by submitting falsified expense reimbursement requests, which were either inflated or related to events that did not occur.
  
  In Indonesia, Wyeth’s indirect majority-owned subsidiary, PT Wyeth Indonesia (including Wyeth Indonesia’s Ethical Nutritional Division), provided cash payments, nutritional products, cell phones, and phone card credits to employees of Indonesian government-owned hospitals.  The payments were made to influence the doctors’ recommendation of Wyeth nutritional products to their patients, to ensure that Wyeth products would be made available to new mothers at hospitals, and to obtain information about new births that could be used for marketing purposes.
  
  To conceal the gift inducements, Wyeth Indonesia instructed distributors to generate invoices and deliver the products, but then to charge back the value of the goods to Wyeth Indonesia so the institutions received the products without charge.  Wyeth’s International Corporate Compliance Office ordered this practice to be stopped, but, Wyeth Indonesia employees continued with the practice and concealed the reimbursement by instructing other vendors to pay the distributors and then obtain reimbursement from Wyeth Indonesia by submitting false invoices.
  
  In Pakistan, Wyeth’s indirect majority-owned subsidiary, Wyeth Pakistan Limited, provided cash payments, travel, office equipment, and renovations to doctors who were employed by state-owned healthcare institutions, to influence doctors to recommend Wyeth products to new mothers.  The improper benefits were initially funded by fictitious expense reimbursement requests, but after Wyeth’s external auditor identified questionable reimbursement submissions, Wyeth Pakistan employees began generating funds with the help of collusive vendors.
  
  In Saudi Arabia, Wyeth operated through COCI Corporation’s representative office.  Wyeth products were marketed and sold through a Saudi Arabian distributor.  The distributor made a payment to a Saudi Arabian customs official to secure the release of Wyeth promotional items, which had been held because Wyeth Saudi Arabia had failed to secure a Certificate of Conformity.  Wyeth Saudi Arabia reimbursed the distributor for his cash payment and recorded it as a “facilitation expense.”

• Enforcement
• On August 7, 2012, the SEC filed a complaint against Wyeth, alleging violations of the books-and-records and internal controls provisions of the FCPA.  Wyeth consented to entry of a final judgment on August 29, 2012, under which Wyeth was ordered to pay disgorgement and prejudgment interest of $18.88 million.

• Amount of the Value
• Not Stated

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Third-party distributors/vendors; Subsidiaries.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 18,876,624

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 218,876,624

• Related Enforcement Actions
• United States v. Pfizer H.C.P. Corporation (D.D.C. 2012)
  SEC v. Pfizer Inc. (D.D.C. 2012)
  

Wyeth LLC

• Citation
• SEC v. Wyeth LLC,No. 1:12-cv-01304 (D.D.C. Aug. 29, 2012).

• Date Filed
• 08/29/2012

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States