SEC v. Schering-Plough Corporation, No. LR-18740, District of Columbia — Press Release
raw: Schering-Plough Corporation
Schering-Plough Corporation, No. LR-18740
Schering-Plough Corporation paid $76,000 through its Polish subsidiary to a charity controlled by a government health official to influence pharmaceutical purchases, failed to record the payments or detect them via internal controls, and agreed to pay a $500,000 civil penalty and implement compliance reforms without admitting or denying the SEC's allegations.
The SEC charged Schering-Plough Corporation with violating the Foreign Corrupt Practices Act’s books and records and internal controls provisions after its Polish subsidiary made $76,000 in improper payments to the Chudow Castle Foundation, a charity headed by a director of the Silesian Health Fund, a government body influencing pharmaceutical purchases. The payments were not accurately reflected in the company’s accounting records, and its internal controls were found inadequate to prevent or detect the misconduct. Without admitting or denying the allegations, Schering-Plough consented to a $500,000 civil penalty, a cease-and-desist order, and a requirement to retain an independent consultant to review and improve its FCPA compliance policies.
The Securities and Exchange Commission filed a civil complaint against Schering-Plough Corporation for violating the Foreign Corrupt Practices Act’s books and records and internal controls provisions. Between February 1999 and March 2002, Schering-Plough Poland made improper payments totaling 315,800 zlotys (approximately $76,000) to the Chudow Castle Foundation, a charitable organization led by the Director of the Silesian Health Fund—a Polish government body with authority over pharmaceutical procurement. These payments were intended to influence the health fund’s purchasing decisions in favor of Schering-Plough’s pharmaceutical products, yet none were accurately recorded in the company’s books, and its internal accounting controls failed to prevent or detect the misconduct. Without admitting or denying the allegations, Schering-Plough consented to a $500,000 civil penalty and a Commission Order requiring it to cease and desist from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. The company also agreed to retain an independent consultant to review its FCPA compliance policies and implement recommended changes. The SEC’s investigation into other potential individuals or entities involved in the scheme remains ongoing. This case underscores the importance of accurate financial reporting and robust internal controls in preventing foreign bribery, even when payments are funneled through seemingly legitimate charitable entities.
Exhibits & Attached Documents (1)
Extracted insights
- $500K $500,000 $100K–$1M
- $76K $76,000 $10K–$100K
- agency the securities and exchange commission
- The Securities and Exchange Commission filed a complaint in federal court seeking a civil penalty against Schering-Plough Corporation
- The complaint alleges that between February 1999 and March 2002 Schering-Plough Poland made improper payments to the Chudow Castle Foundation
- Schering-Plough Poland made improper payments to the Chudow Castle Foundation
- The Chudow Castle Foundation was headed by an individual who was the Director of the Silesian
The Securities and Exchange Commission announced today that it has filed a complaint in federal court seeking a civil penalty against Schering-Plough Corporation, for violating the books and records and internal controls provisions of the Foreign Corrupt Practices Act. The Commission's complaint alleges that, between February 1999 and March 2002, one of Schering-Plough's foreign subsidiaries, Schering-Plough Poland, made improper payments to a charitable organization called the Chudow Castle Foundation. The Foundation was headed by an individual who was the Director of the Silesian Health Fund during the relevant time. The health fund was a Polish governmental body that, among other things, provided money for the purchase of pharmaceutical products and influenced the purchase of those products by other entities, such as hospitals, through the allocation of health fund resources. According to the complaint, Schering-Plough Poland paid 315,800 zlotys (approximately $76,000) to the Chudow Castle Foundation to induce the Director to influence the health fund's purchase of Schering-Plough's pharmaceutical products. The complaint alleges that none of the payments made by Schering-Plough Poland to the Foundation was accurately reflected on the subsidiary's books and records. The complaint also alleges that the company's system of internal accounting controls was inadequate to prevent or detect the improper payments. Without admitting or denying the allegations in the complaint, Schering-Plough consented to pay a $500,000 civil penalty. In a related enforcement action announced today, Schering-Plough consented, without admitting or denying the Commission's findings, to the issuance of a Commission Order requiring Schering-Plough to cease and desist from committing or causing violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. Schering-Plough also was ordered to comply with its undertakings to retain an independent consultant to review the company's policies and procedures regarding compliance with the Foreign Corrupt Practices Act and to implement any changes recommended by the consultant. (Rel. No. 34-49838; File No. 3-11517). The Commission's investigation is continuing as to others. SEC Complaint in this matter
The Securities and Exchange Commission announced today that it has filed a complaint in federal court seeking a civil penalty against Schering-Plough Corporation, for violating the books and records and internal controls provisions of the Foreign Corrupt Practices Act. The Commission's complaint alleges that, between February 1999 and March 2002, one of Schering-Plough's foreign subsidiaries, Schering-Plough Poland, made improper payments to a charitable organization called the Chudow Castle Foundation. The Foundation was headed by an individual who was the Director of the Silesian Health Fund during the relevant time. The health fund was a Polish governmental body that, among other things, provided money for the purchase of pharmaceutical products and influenced the purchase of those products by other entities, such as hospitals, through the allocation of health fund resources. According to the complaint, Schering-Plough Poland paid 315,800 zlotys (approximately $76,000) to the Chudow Castle Foundation to induce the Director to influence the health fund's purchase of Schering-Plough's pharmaceutical products. The complaint alleges that none of the payments made by Schering-Plough Poland to the Foundation was accurately reflected on the subsidiary's books and records. The complaint also alleges that the company's system of internal accounting controls was inadequate to prevent or detect the improper payments. Without admitting or denying the allegations in the complaint, Schering-Plough consented to pay a $500,000 civil penalty. In a related enforcement action announced today, Schering-Plough consented, without admitting or denying the Commission's findings, to the issuance of a Commission Order requiring Schering-Plough to cease and desist from committing or causing violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. Schering-Plough also was ordered to comply with its undertakings to retain an independent consultant to review the company's policies and procedures regarding compliance with the Foreign Corrupt Practices Act and to implement any changes recommended by the consultant. (Rel. No. 34-49838; File No. 3-11517). The Commission's investigation is continuing as to others. SEC Complaint in this matter