Issue link: https://digital.shearman.com/i/1265921
ENFORCEMENT ACTIONS AND STRATEGIES FCPA DIGEST July 2020 6 The Airbus enforcement action remained the sole FCPA-related DOJ action in the first half of 2020 until the DOJ announced two related DPAs on June 25, 2020 against Novartis Hellas S.A.C.I. and Alcon Pte Ltd. Novartis AG's subsidiary in Greece, Novartis Hellas S.A.C.I., and its former subsidiary, Alcon Pte Ltd, agreed to settle FCPA-related charges with the DOJ. Novartis AG is a Switzerland-based multinational pharmaceutical company, and it had sold Alcon Pte Ltd to Alcon Inc., a multinational eye care company, in April 2019, after the alleged misconduct occurred. According to the DOJ, Novartis Hellas bribed employees of state-owned hospitals in Greece and falsely recorded such improper payments, while Alcon Pte Ltd engaged in similar conduct in Vietnam. In settling these FCPA-related charges, Novartis Hellas S.A.C.I and Alcon Pte Ltd agreed to pay a criminal fine of $225 million and around $8.9 million, respectively. An investigation by Greek authorities into Novartis continues unabated, even in light of the U.S. settlement agreements. SEC ACTIONS 1 The SEC settled its first case of the year on February 28, 2020, issuing a cease-and-desist order in its Cardinal Health investigation for alleged misconduct by the company's Chinese subsidiary, which it had acquired in 2010. At the core of the SEC's allegations, the subsidiary allegedly failed to disentangle its books and records from those of a European supplier of a product for which Cardinal Health was the sole distributor in China. The subsidiary also allegedly hired employees on behalf of the European supplier without providing adequate oversight, which proved problematic. According to the SEC, the employees made payments from marketing accounts without proper management authorization due to the subsidiary's insufficient controls. The SEC further alleged that the subsidiary failed to record accurately such marketing payments on its books and records. According to the SEC, Cardinal Health violated the FCPA's internal accounting controls and recordkeeping provisions in relation to the subsidiary's marketing payments. The SEC settled its enforcement action against Cardinal Health, recognizing the company's remedial efforts, which included self-disclosure of an internal investigation, terminating employees involved in the scheme, and cooperating with the SEC, among other actions. Cardinal Health was required to pay $5.4 million in disgorgement, $916,887 in prejudgment interest, and a civil monetary penalty of $2,500,000, for a total of around $8.8 million. 1 Before the publication date, but after the end of the Second Quarter, the SEC announced an enforcement action against Alexion Pharmaceuticals, in which the company agreed to pay $21.4 million to resolve FCPA The SEC finalized the government's first COVID-19 era case as it filed a cease-and-desist order against Eni S.p.A. on April 17, 2020. Eni S.p.A. is a global oil and gas company headquartered in Rome, Italy, and according to the SEC, it violated the FCPA's internal accounting controls and recordkeeping provisions because of a subsidiary's actions in Algeria. Management of Saipem S.p.A., the subsidiary controlled by Eni S.p.A., allegedly met with the Algerian Energy Minister in 2006, who told them that to obtain business in Algeria, Saipem would need to hire an intermediary and pay invoices for services that would not be rendered. According to the SEC, Eni received approximately $19,750,000 of unwarranted tax benefit as a result of Saipem misclassifying its bribes as legitimate business expenses. Notably, this enforcement action makes Eni a repeat offender: it had previously settled with the SEC in 2010 to resolve similar allegations that it violated the books and records and internal accounting controls of the FCPA with respect to efforts by Snamprogetti Netherlands, B.V., its then wholly-owned subsidiary, to construct a natural gas facility in Nigeria. The SEC settled this year's enforcement action against Eni by issuing a cease-and-desist letter, noting both the company's repeat-offender status and its positive remedial efforts and cooperation with the SEC. It ordered Eni to pay $19.75 million in disgorgement, as well as $4.75 million in prejudgment interest, for a total penalty of $24.5 million. charges. The Alexion enforcement action will be included in the year-end Trends and Patterns.