SEC Charges Cardinal Health With FCPA Violations
Cardinal Health, Inc. agreed to pay over $8 million to resolve SEC charges that its Chinese subsidiary made improper payments to government and state-owned retail employees between 2010 and 2016 to influence purchases, violating FCPA books and records and internal controls provisions by failing to supervise high-risk marketing accounts tied to a European dermocosmetic company.
Cardinal Health, Inc. violated the Foreign Corrupt Practices Act by failing to maintain adequate internal accounting controls and accurate books and records between 2010 and 2016, allowing its Chinese subsidiary to funnel payments through marketing accounts managed on behalf of a European dermocosmetic company. These payments were directed to government-employed healthcare professionals and state-owned retail employees to influence purchasing decisions, while Cardinal profited from sales generated by the illicit activity. Without admitting or denying the allegations, Cardinal consented to a cease-and-desist order and paid $5.4 million in disgorgement, $916,887 in prejudgment interest, and a $2.5 million civil penalty, totaling over $8.8 million.
Cardinal Health, Inc., an Ohio-based pharmaceutical company, agreed to pay over $8.8 million to resolve SEC charges that its former Chinese subsidiary engaged in improper payments to government-employed healthcare professionals and employees of state-owned retail companies between 2010 and 2016. These payments were made through marketing accounts managed on behalf of a European dermocosmetic company, which directed the day-to-day activities of Cardinal China’s employees and used the funds to influence purchasing decisions. Cardinal failed to apply its internal accounting controls to these high-risk accounts, did not verify the legitimacy of transactions, and did not maintain accurate books and records, despite profiting from a share of sales generated by the illicit payments. The SEC found that Cardinal’s lack of anti-bribery safeguards created a significant risk that corrupt payments would go undetected. Without admitting or denying the findings, Cardinal consented to a cease-and-desist order and paid $5.4 million in disgorgement, $916,887 in prejudgment interest, and a $2.5 million civil penalty. The investigation was conducted by Eric Day and supervised by Anita B. Bandy and Mark Cave. The case underscores the importance of robust compliance controls in foreign subsidiaries engaged in high-risk distribution partnerships.
Exhibits & Attached Documents (1)
Extracted insights
- $8.00M $8 million $1M–$10M
- $5.40M $5.4 million $1M–$10M
- $2.50M $2.5 million $1M–$10M
- $917K $916,887 $100K–$1M
- person anita b. bandy
- person cardinal china
- person cardinal china employees
- company cardinal health, inc.
- person eric day
- person mark cave
- agency sec investigation
- agency Securities and Exchange Commission
- company two large marketing accounts for a european dermocosmetic company
- SEC announced Cardinal Health, Inc. agreed to pay more than $8 million to resolve FCPA charges
- Cardinal Health, Inc. agreed to pay $8 million
- Cardinal Health, Inc. violated books and records and internal accounting controls provisions of the FCPA
- Cardinal China retained thousands of employees
- Cardinal China managed two large marketing accounts for a European dermocosmetic company
- Cardinal China employees made improper payments to government-employed healthcare professionals and employees of state-owned retail companies
- Cardinal Health, Inc. failed to maintain complete and accurate books and records concerning the marketing accounts
- Cardinal Health, Inc. consented to pay $5.4 million in disgorgement, $916,887 in prejudgment interest, and $2.5 million civil penalty
- Eric Day conducted SEC investigation
- Mark Cave supervised SEC investigation
- Anita B. Bandy supervised SEC investigation
- Cardinal Health, Inc. violated FCPA between 2010 and 2016
The Securities and Exchange Commission today announced that Ohio-based pharmaceutical company Cardinal Health, Inc. has agreed to pay more than $8 million to resolve charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA). According to the SEC's order, Cardinal's internal accounting controls were not sufficient to detect improper payments made by employees of its former Chinese subsidiary. The order finds that, between 2010 and 2016, Cardinal China retained thousands of employees and managed two large marketing accounts for the benefit of a European dermocosmetic company whose products Cardinal China distributed. The dermocosmetic company directed the day-to-day activities of the Cardinal China employees, who used the marketing account funds to promote the dermocosmetic company's products. According to the order, employees directed payments to government-employed healthcare professionals and to employees of state-owned retail companies who had influence over purchasing decisions. The order finds that Cardinal did not apply its full accounting controls to the accounts and regularly authorized the payments without reasonable assurances that the transactions were executed appropriately. A profit-sharing agreement with the dermocosmetic company provided Cardinal with a percentage of profits from sales derived from the improper payments. As a result, the order finds, Cardinal also failed to maintain complete and accurate books and records concerning the marketing accounts. "Cardinal's foreign subsidiary hired thousands of employees and maintained financial accounts on behalf of a supplier without implementing anti-bribery controls surrounding these high-risk business practices," said Anita B. Bandy, an Associate Director in the SEC's Division of Enforcement. "The FCPA is designed to prohibit such conduct, which undermined the integrity of Cardinal's books and records and heightened the risk that improper payments would go undetected." Without admitting or denying the SEC's findings, Cardinal consented to the entry of an order requiring the company to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA and to pay $5.4 million in disgorgement, $916,887 in prejudgment interest, and a civil penalty of $2.5 million. The SEC's investigation was conducted by Eric Day. The investigation was supervised by Mark Cave and Ms. Bandy.
The Securities and Exchange Commission today announced that Ohio-based pharmaceutical company Cardinal Health, Inc. has agreed to pay more than $8 million to resolve charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA). According to the SEC's order, Cardinal's internal accounting controls were not sufficient to detect improper payments made by employees of its former Chinese subsidiary. The order finds that, between 2010 and 2016, Cardinal China retained thousands of employees and managed two large marketing accounts for the benefit of a European dermocosmetic company whose products Cardinal China distributed. The dermocosmetic company directed the day-to-day activities of the Cardinal China employees, who used the marketing account funds to promote the dermocosmetic company's products. According to the order, employees directed payments to government-employed healthcare professionals and to employees of state-owned retail companies who had influence over purchasing decisions. The order finds that Cardinal did not apply its full accounting controls to the accounts and regularly authorized the payments without reasonable assurances that the transactions were executed appropriately. A profit-sharing agreement with the dermocosmetic company provided Cardinal with a percentage of profits from sales derived from the improper payments. As a result, the order finds, Cardinal also failed to maintain complete and accurate books and records concerning the marketing accounts. "Cardinal's foreign subsidiary hired thousands of employees and maintained financial accounts on behalf of a supplier without implementing anti-bribery controls surrounding these high-risk business practices," said Anita B. Bandy, an Associate Director in the SEC's Division of Enforcement. "The FCPA is designed to prohibit such conduct, which undermined the integrity of Cardinal's books and records and heightened the risk that improper payments would go undetected." Without admitting or denying the SEC's findings, Cardinal consented to the entry of an order requiring the company to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA and to pay $5.4 million in disgorgement, $916,887 in prejudgment interest, and a civil penalty of $2.5 million. The SEC's investigation was conducted by Eric Day. The investigation was supervised by Mark Cave and Ms. Bandy.