(By Balachander) Eli Lilly & Co. (NYSE: LLY) has agreed to pay more than $29 million to settle allegations that its subsidiaries made improper payments to government officials in Russia, Brazil, China and Poland to win millions of dollars of business.
The U.S. Securities and Exchange Commission (SEC) charged Eli Lilly with violations of the Foreign Corrupt Practices Act (FCPA).
The settlement relates to a probe by the SEC of certain activities of four Lilly affiliates – Brazil, China, Poland and Russia – from 1994 through 2009.
Eli Lilly said it was notified of the investigation in August 2003.
[Related -Is This The Start Of A Correction?]
The SEC alleged that when the Indianapolis-based pharmaceutical company did become aware of possible FCPA violations in Russia, Lilly did not curtail the subsidiary's use of the marketing agreements for more than five years.
Lilly subsidiaries in Brazil, China, and Poland also made improper payments to government officials or third-party entities associated with government officials, the SEC said.
"Eli Lilly and its subsidiaries possessed a ‘check the box' mentality when it came to third-party due diligence," said Kara Novaco Brockmeyer, Chief of the SEC Enforcement Division's Foreign Corrupt Practices Unit.
Brockmeyer said companies can't simply rely on paper-thin assurances by employees, distributors, or customers.
The company neither admitted or denied the allegations and agreed to have an independent compliance consultant conduct a 60-day review of its internal controls and compliance program related to the FCPA.
[Related -Eli Lilly & Co. (LLY): Breast Cancer Drug Failure A Big Blow Amid Generic Threats]
The stock, which has been trading in the 52-week range of $38.30 to $53.99, inched 0.51 percent higher to trade at $49.17 on Thursday.