SANOFI SA

INDUSTRY

Pharmaceuticals /Medical Devices /Health

CORPORATE HEADQUARTERS

Paris, France

SUMMARY OF ALLEGATIONS

Nationality of Foreign Officials: Bahrain, Jordan, Kazakhstan, Kuwait, Lebanon, Oman, Qatar, Syria, United Arab Emirates, Yemen

Summary of Allegations:

Sanofi received anonymous allegations of wrongdoing related to improper payments to healthcare professionals in connection with the sale of pharmaceutical products that may have occurred between 2007 and 2013 in certain parts of the Middle East and Africa.

On 4 September 2018, the Securities and Exchange Commission found, pursuant to an Offer of Settlement submitted by Sanofi, that from at least 2011 to 2015, employees and agents of Sanofi’s subsidiaries in Kazakhstan, Levant, and the Gulf acted to provide things of value to foreign officials, including healthcare professionals, to improperly influence them and increase sales of Sanofi products.

According to the SEC's order, the schemes took various forms. In Kazakhstan, bribes were paid with money kicked-back from distributors whom the company had directed toward successful public-tender bids. In Lebanon, the company drove up prescriptions of its products by means of a variety of gifts and favors to medical professionals at public hospitals. And in a number of Persian Gulf states, false reimbursement claims for travel and entertainment were used to generate funds to pay private-sector health-care professionals to increase prescriptions of the company’s products. In each instance, the SEC found that appropriate controls were lacking.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: Unspecified

Nationality of Foreign Officials: China

Summary of Allegations:

According to the New York Times, Chinese authorities began an investigation on 11 August 2013 of the French drug maker Sanofi after a news report in the state-owned 21st Century Business Herald accused the company of bribing hundreds of Chinese doctors in 2007. An unidentified source reported that the French company paid 503 doctors a total of USD 274,000 to prescribe Sanofi products, disguising the payments as grants for research programs.


Approximate Alleged Payments to Foreign Officials: USD 274,000

Business Advantage Allegedly Obtained: prescription of Sanofi products

Nationality of Foreign Officials: Germany

Summary of Allegations:

In May 2013, a German court convicted two former employees of Sanofi on bribery charges and imposed a fine of EU 28 million (or USD 39 million) on the French drug-maker. According to a spokesperson for the German prosecutor's office, the investigation of the former Sanofi employees found that they had made illicit payments to a consultancy. The consultancy worked with one of Sanofi's clients between 2007 and 2010, allegedly using bribes in order to win more orders from the client, a pharmaceuticals dealer. The convicted employees worked with Sanofi's sales force in Germany and were not senior managers.

The bribery investigation did not come to light until 2014 because the suspects were sentenced via a simplified legal process under German law that allows courts to try some crimes without a trial. A spokeswoman for Sanofi confirmed the company paid EU 28 million (USD 39 million) in connection with the case.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: win more orders from pharmaceuticals dealer

Nationality of Foreign Officials: Kenya

Summary of Allegations:

In October 2014, Sanofi began an internal investigation into allegations of corrupt practices. Between 2007 and 2012, Sanofi employees allegedly made improper payments to doctors and distributed perks based on whether the doctors prescribed or planned to prescribe Sanofi drugs. Employees in its Kenya subsidiary allegedly paid for influential medical professionals to attend conferences, many of which were out of the country, and gave them cash and gifts at its own events to win business. According to the allegations, doctors would request money from the subsidiary to attend conferences and events, and Sanofi employees would consider the doctor?s value to Sanofi business before deciding whether to sponsor them or not.

On 6 October 2014, Sanofi self-reported allegations of improper payments in the Middle East and Africa to the U.S. Securities and Exchange Commission ("SEC") and the U.S. Department of Justice ("DOJ"). The allegations stemmed from an anonymous whistleblower complaint and relate to possible illegal payments in the Middle East and Africa from 2007 to 2012.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: prescription of Sanofi drugs

ENFORCEMENT RESULTS

Agencies: China: National Health and Family Planning Commission
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:

According to a 12 August 2013 Bloomberg article, the National Health and Family Planning Commission in China has instructed local health authorities to investigate these allegations.



Agencies: Germany: Unspecified
Results: Criminal Fine, Prosecution of Individuals
Year Resolved: 2013
Compliance Monitor:
Ongoing: No
Details:

In May 2013, a German court convicted two former employees of Sanofi on bribery charges and imposed a fine of EU 28 million (or USD 39 million) on the French drug-maker. According to a spokesperson for the German prosecutor's office, the investigation of the former Sanofi employees found that they had made illicit payments to a consultancy. The consultancy worked with one of Sanofi's clients between 2007 and 2010, allegedly using bribes in order to win more orders from the client, a pharmaceuticals dealer. The convicted employees worked with Sanofi's sales force in Germany and were not senior managers.

The bribery investigation did not come to light until 2014 because the suspects were sentenced via a simplified legal process under German law that allows courts to try some crimes without a trial. A spokeswoman for Sanofi confirmed the company paid EU 28 million (USD 39 million) in connection with the case.



Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Civil Penalty, Disgorgement
Year Resolved: 2018
Compliance Monitor:
Ongoing: No
Details:

In its Form 20-F filed with the SEC on 11 March 2015, Sanofi disclosed that it self-reported allegations that certain subsidiaries outside the US made improper payments in connection with the sale of pharmaceutical products to the DOJ and SEC. Sanofi also received anonymous allegations of wrongdoing related to improper payments to healthcare professionals in connection with the sale of pharmaceutical products that may have occurred between 2007 and 2013 in certain parts of the Middle East and Africa. Sanofi had voluntarily provided and will continue to provide information to the authorities and will provide full cooperation.

In its Form 20-F filed with the SEC on 7 March 2018, Sanofi disclosed the DOJ's decision to close the investigation. The investigation by the SEC was ongoing.

On 4 September 2018, the SEC issued a consensual Cease-and-Desist order based on the company's inadequate internal accounting controls and recordkeeping. Sanofi was ordered to pay USD 17,531,666 in disgorgement, USD 2,674,479 in prejudgment interest, and a civil penalty restricted to USD 5,000,000 based on the company's cooperation in the matter.



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