Yesterday the U.S. Attorney’s office filed an Information and deferred prosecution agreement against Pfizer H.C.P. Corp., a subsidiary of Pfizer Inc. The deferred prosecution agreement is the result of a settlement reached by Pfizer H.C.P. with the United States relating to identified Foreign Corrupt Practices Act (“FCPA”) violations.
Following what the Department of Justice has described as a “thorough and wide-reaching self-investigation of the underlying and related conduct,” Pfizer H.C.P. agreed to pay a $15 million penalty.
According to the information filed in the District Court in the District of Columbia, Pfizer H.C.P. made numerous improper payments to government officials in Bulgaria, Croatia, Kazakhstan and Russia for purposes of influencing regulatory change in those countries and obtaining pharmaceutical contracts. Pfizer H.C.P. used various means of making these improper payments, including the employment of consulting contracts, an exclusive distributorship and straight-forward cash payments.
In a related matter, Pfizer Inc. and Wyeth LLC, a company recently acquired by Pfizer, reached a settlement with the SEC which included the disgorgement of $26.3 million and $18.8 million, respectively, in profits earned as a result of misconduct by their subsidiaries.
Of note in this matter are the great efforts Pfizer made in cooperating with the Government. Pfizer H.C.P. admitted to substantial bribes paid to government officials and over $7 million realized in profits as a result thereof.
Furthermore, Pfizer Inc. conducted an extensive internal investigation, through which it made a timely self-disclosure of the improper conduct, cooperated significantly with the Department of Justice and the SEC, and made “early and extensive remedial efforts.” The DOJ also recognized Pfizer’s efforts going forward to improve its compliance procedures.
By taking the laboring oar of conducting an extensive investigation, by cooperating with the DOJ, and by reporting the misconduct early, Pfizer no doubt saved itself a considerable amount of fines and criminal penalties. Even more importantly, the DOJ acknowledged that it is because of these efforts by Pfizer that it determined not to pursue a criminal action for the conduct of the Wyeth subsidiaries.
One can only speculate what the monetary penalties would have been absent the self-disclosure and subsequent cooperation. However, the avoidance of criminal prosecution demonstrates the value behind early self-disclosure and the initiation of an objective internal investigation at the earliest signs of misconduct.