Nationality of Foreign Officials: China
Summary of Allegations:
In and about 2010, Cardinal Health entered the Chinese market partly by acquiring a few China subsidiaries of a pharmaceutical distribution company and formed Cardinal China, which continued to distribute medications, medical devices, and health products for global suppliers.
After the acquisition, Cardinal China kept its books and records, terminated most of the pre-existing distribution agreements due to compliance risk assessment, but maintained an agreement with a European cosmetics company.
Cardinal China maintained marketing accounts and hired 2,000 employees for the European cosmetic company. These employees were contractually managed by Cardinal China but reported to the cosmetic company for daily operations.
Between at least 2013 and 2016, the employees allegedly made illicit payments of US $250 million with Cardinal China's authorization to government-employed healthcare professionals and state-owned entities to promote the cosmetic company's products. The bribes were funded via the marketing accounts and concealed by the mischaracterization of accounting records, the use of third parties, and the falsification of documents. The profit derived from the bribery scheme amounted to $5,400,000 between 2013 and 2016.
Cardinal China learned the scheme in 2016 and promptly ceased the payments.
Approximate Alleged Payments to Foreign Officials: US $250 million
Business Advantage Allegedly Obtained: Promotion of products
Agencies: United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Civil Penalty, Disgorgement
Year Resolved: 2020
On 28 February 2020, Cardinal Health, Inc.reached a settlement with the U.S. Securities and Exchange Commission to resolve violations of the internal accounting controls and recordkeeping provisions of the Foreign Corrupt Practices Act.
Under the terms of the cease and desist order, the company will pay disgorgement of $5.4 million, prejudgment interests of $916,887, and a civil money penalty of $2.5 million.
Discovery Method: Unspecified