Pfizer (PFE) Settles Improper Payments Investigation with U.S. SEC, DOJ; to Pay ~$41M in Fines
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Pfizer Inc. (NYSE: PFE) has resolved U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) matters related to certain improper payments in the operations of two of its subsidiaries outside the United States, which Pfizer voluntarily reported to the U.S. government beginning in 2004. To resolve those historical issues, a Pfizer indirect subsidiary (Pfizer H.C.P. Corporation) will enter into a deferred prosecution agreement with the DOJ, and pay a fine of $15 million. Under the terms of a civil settlement with the SEC, Pfizer Inc. agreed to a disgorgement of profits of $16 million and prejudgment interest of $10.3 million. The DOJ declined to bring a criminal action against Pfizer Inc.
In a separate civil settlement also announced today with the SEC, Pfizer’s Wyeth subsidiary has agreed to a disgorgement of profits of $17.2 million and prejudgment interest of $1.66 million to resolve issues involving certain improper payments in the operations of four subsidiaries outside the United States. Pfizer conducted a risk-based Foreign Corrupt Practices Act (FCPA) due diligence review of Wyeth’s global operations after it acquired the company in late 2009 and, as it had with its own issues, promptly and voluntarily disclosed these issues to the U.S. government.
There is no allegation by either DOJ or SEC that anyone at Pfizer’s or Wyeth’s corporate headquarters knew of or approved the conduct at issue before Pfizer took appropriate action to investigate and report it. As soon as these local activities came to the attention of Pfizer’s corporate headquarters, they were voluntarily brought to the attention of the DOJ and SEC. Today’s settlements are focused solely on these local activities.
All the conduct at issue was investigated by Pfizer and voluntarily disclosed to the U.S. government. Pfizer began self-reporting to the U.S. government in 2004 after the discovery of certain improper payments that had been made by employees of a recently-acquired Pfizer affiliate in Croatia. Pfizer legal and compliance staff, outside counsel and auditors then conducted an intensive, global, multi-year internal investigation. Throughout this period, Pfizer regularly briefed both the DOJ and SEC on its findings.
The DOJ settlement with Pfizer H.C.P. Corporation covers improper conduct in Bulgaria, Croatia, Kazakhstan, and Russia. The Pfizer SEC civil settlement covers improper conduct in all of these countries as well as in Italy, China, the Czech Republic and Serbia.
In addition, Pfizer’s post-acquisition due diligence review of Wyeth identified certain improper payments in China, Saudi Arabia, Indonesia and Pakistan. Pfizer identified these legacy-Wyeth issues within 180 days after the acquisition closed, voluntarily disclosed them to the U.S. government, and they are covered in Wyeth’s separate SEC civil settlement.
In recognition of the depth of Pfizer’s extraordinary and proactive efforts to self-report dating back to 2004, as well as its adoption of an extensive anti-corruption compliance program, the DOJ and the SEC agreed that the appointment of an independent compliance monitor for the company was unnecessary.
As part of its agreement with the DOJ, Pfizer H.C.P. Corporation will continue to cooperate with the DOJ for a period of two years in connection with its settlement. Pfizer Inc. will continue to maintain the rigorous anti-corruption systems and innovative compliance program that it voluntarily developed and implemented, including the proactive market reviews and trend analyses it pioneered approximately five years ago. The company already has integrated Wyeth operations and employees into those programs and systems.
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In a separate civil settlement also announced today with the SEC, Pfizer’s Wyeth subsidiary has agreed to a disgorgement of profits of $17.2 million and prejudgment interest of $1.66 million to resolve issues involving certain improper payments in the operations of four subsidiaries outside the United States. Pfizer conducted a risk-based Foreign Corrupt Practices Act (FCPA) due diligence review of Wyeth’s global operations after it acquired the company in late 2009 and, as it had with its own issues, promptly and voluntarily disclosed these issues to the U.S. government.
There is no allegation by either DOJ or SEC that anyone at Pfizer’s or Wyeth’s corporate headquarters knew of or approved the conduct at issue before Pfizer took appropriate action to investigate and report it. As soon as these local activities came to the attention of Pfizer’s corporate headquarters, they were voluntarily brought to the attention of the DOJ and SEC. Today’s settlements are focused solely on these local activities.
All the conduct at issue was investigated by Pfizer and voluntarily disclosed to the U.S. government. Pfizer began self-reporting to the U.S. government in 2004 after the discovery of certain improper payments that had been made by employees of a recently-acquired Pfizer affiliate in Croatia. Pfizer legal and compliance staff, outside counsel and auditors then conducted an intensive, global, multi-year internal investigation. Throughout this period, Pfizer regularly briefed both the DOJ and SEC on its findings.
The DOJ settlement with Pfizer H.C.P. Corporation covers improper conduct in Bulgaria, Croatia, Kazakhstan, and Russia. The Pfizer SEC civil settlement covers improper conduct in all of these countries as well as in Italy, China, the Czech Republic and Serbia.
In addition, Pfizer’s post-acquisition due diligence review of Wyeth identified certain improper payments in China, Saudi Arabia, Indonesia and Pakistan. Pfizer identified these legacy-Wyeth issues within 180 days after the acquisition closed, voluntarily disclosed them to the U.S. government, and they are covered in Wyeth’s separate SEC civil settlement.
In recognition of the depth of Pfizer’s extraordinary and proactive efforts to self-report dating back to 2004, as well as its adoption of an extensive anti-corruption compliance program, the DOJ and the SEC agreed that the appointment of an independent compliance monitor for the company was unnecessary.
As part of its agreement with the DOJ, Pfizer H.C.P. Corporation will continue to cooperate with the DOJ for a period of two years in connection with its settlement. Pfizer Inc. will continue to maintain the rigorous anti-corruption systems and innovative compliance program that it voluntarily developed and implemented, including the proactive market reviews and trend analyses it pioneered approximately five years ago. The company already has integrated Wyeth operations and employees into those programs and systems.
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