This Week in Compliance: Novartis faces fresh bribery allegations in China

Here’s what's been going on in the compliance world this week:

Business

• Novartis faces fresh bribery allegations in China: The Swiss multinational pharmaceutical company Novartis has been embroiled in new bribery allegations in China, as an employee working at Novartis’ Chinese affiliate accused the company of holding fake academic activities and paying clinical doctors kickbacks in order to promote the company's new drugs. Novartis has launched an internal investigation into the allegations. Back in 2016, Novartis agreed to pay USD 25 million to the US Securities and Exchange Commission (SEC) to settle FCPA violations in China also. Reportedly, the company’s Chinese subsidiaries had engaged in pay-to-prescribe schemes to increase sales.

• Internal whistleblower at Alere receives USD 5.6 million: Amanda Wu, a senior control analyst at Alere, filed a lawsuit under the False Claim Act in 2011 accusing the company of using unreliable testing and diagnostic devices for heart patients and others. Last week, Alere and its subsidiary Alere San Diego agreed to settle the allegations by paying USD 33.2 to US authorities; The whistleblower was awarded USD 5.6 million. According to the Department of Justice (DOJ), Alere knowingly sold, between 2006 and 2012, defect rapid point-of-care testing devices commonly used to diagnose acute coronary syndromes, heart failure, and other serious conditions. The devices were also frequently used in emergency departments.

Government

• Mongolia’s former finance minister arrested in the Oyu Tolgoi mine case: Bayartsogt Sangajav, former finance minister of Mongolia, has been arrested on charges of abuse of power related to the investment talks for the giant Oyu Tolgoi copper mine in 2009. Reportedly, Bayartsogt signed an agreement with Canada’s Ivanhoe Mines on behalf of the Mongolian government, in 2009, to develop the mine and granted the company a 66 percent controlling stake. In the meanwhile, the Swiss Office of the Attorney General (OAG) is investigating a seized bank account which was, according to court documents, used to transfer USD 10 million to Bayartsogt back in late 2008. Ivanhoe Mines has since then changed its name to Turquoise Hill Resources whose larger share has been acquired by Anglo-Australian mining giant Rio Tinto. Bayartsogt denies the allegations.
• Supreme Court reject’s Lula’s plea to avoid jail: Brazil’s Supreme Court has denied Lula da Silva’s request to avoid being sent to prison while he appeals a 12-year prison sentence he received for accepting bribes worth GBP 790,000 from OAS. Lula’s conviction was upheld on a first appeal earlier this year already and may be sent to jail within a week’s time. Lula has been leading the polls just ahead of the presidential election, despite his conviction and six separate pending corruption trials, nonetheless, the rejection of Lula’s plea might most likely stall the former president’s political career altogether. Lula denies any wrongdoing and claims that the charges against him aim to prevent him from running for president.
• Former Argentinian planning minister charged with corruption: Julio De Vido, former Argentinian planning minister – one of the most influential ministers in former President Cristina Fernandez’s administration – was charged in connection to the corruption case involving the construction giant Odebrecht. De Vido was charged along with several other ex-officials with illegally favoring Odebrecht in the award of USD multi-million contracts for the construction of gas pipelines while in public office since 2005. If found guilty, De Vido could face up to six years’ imprisonment. He is also investigated for embezzlement allegations in relation to another case involving a coal mine.

Noteworthy

• Finnish justice ministry special advisor steps down: Finland’s justice ministry’s special advisor Mäkinen has stepped down from his position as Finnish police are conducting an investigation into potential bribery and abuse of office. According to Mäkinen himself, an anonymous whistleblower filed a criminal complaint against him related to events that took place as he chaired Vantaa’s City Council in 2015. Mäkinen has worked under justice Minister Antti Häkkänen for almost a year and says that the allegations do not pertain to the work he carried out as a special advisor at the ministry. Mäkinen denies all wrongdoing.