AstraZeneca PLC (AZN) is a global biopharmaceutical company incorporated in the United Kingdom and headquartered in London. Throughout the relevant period, AZN’s American Depositary Shares were registered with the SEC and publicly traded on the New York Stock Exchange.
Between 2007 and 2010, employees at AstraZeneca's Chinese subsidiary, AstraZeneca (Wuxi) Trading Co. Limited (“AZ China”), made numerous improper payments in cash, gifts, entertainment, and other items to health care providers (HCPs) employed at state-owned or state-controlled entities in China as incentives to purchase or prescribe AZN pharmaceuticals. In several instances, AZ China sales staff submitted, and managerial employees approved, fake tax receipts for fraudulent reimbursements to generate cash that was used to make improper payments to HCPs. AZ China staff also used a travel vendor who submitted fake or inflated invoices to generate cash that could be used to funnel money to HCPs. In other instances, AZ China paid speaker fees to HCPs despite insufficient supporting documentation or for speaker engagements that were completely fabricated. Improper payments may also have been paid to bank accounts in doctors' names. AZ China employees also made cash payments to local Chinese officials to get reductions or dismissals of proposed financial sanctions against the subsidiary.
Similarly, from at least 2005 until 2010, employees at AstraZeneca's Russian subsidiaries, AstraZeneca UK Limited and OOO AstraZeneca Pharmaceuticals (collectively, "AZ Russia") provided improper incentives to government-employed HCPs in connection with sales of AZN pharmaceutical products. According to the cease-and-desist order, "employees at several levels of AZ Russia management directed or condoned their subordinates’ practices of providing improper benefits to government-employed HCPs, which occurred in multiple regions where AZ Russia operates."
On August 30, 2016, the SEC filed an administrative cease-and-desist proceeding against AstraZeneca, alleging violations of the books and records and internal controls provisions of the FCPA. AstraZeneca consented to the order without admitting or denying any of the findings contained therein, and agreed to pay disgorgement of $4,325,000, prejudgment interest of $822,000, and a civil money penalty of $375,000.
Although AstraZeneca did not self-report its violations to the SEC, the company provided "significant cooperation" to the Commission and undertook a number of voluntary remedial measures to address deficiencies in its compliance program.
