Even during this difficult time of the pandemic, economic uncertainty and social unrest, the Justice Department and the SEC have concluded a major FCPA enforcement action. 

Novartis and Alcon (which was a Novartis subsidiary at the time of the misconduct) agreed to pay a total of $345 million in criminal and civil penalties.  Novartis spun off Alcon in 2019.

Under the DOJ settlement, Novartis and Alcon each entered into a deferred prosecution agreement; Novartis agreed to pay a fine of $225 million and Alcon agreed to pay $8.9 million in criminal penalties.  Novartis also entered into a settlement with the SEC under which they agreed to pay a total of $112 million.

The FCPA violations arose from Novartis and Alcon’s conduct in Greece and Viet Nam, respectively, which will be described in detail in Part II of this series. 

Under the FCPA Corporate Enforcement Policy, the DPA outlined the following factors for Novartis and Alcon, respectively:

Novartis

• Novartis did not receive voluntary disclosure credit.

• Novartis received full credit for its cooperation, including conduct of a thorough internal investigation, factual presentations to DOJ prosecutors and producing extensive documentation in compliance with foreign data privacy laws. 

• Novartis engaged in remedial measures, including implementing revised and enhanced policies and procedures relating to, among other things, accounting, anti-corruption, gifts, travel, and entertainment, both globally and at the country level; enhancing controls relating to sponsorships to international medical congresses and Phase IV studies; and working with outside counsel to conduct an extensive internal investigation of the Company’s operations in Greece.

• Based on Novartis’ remediation and compliance programs, DOJ did not impose an independent compliance monitor; instead, Novartis will have to submit regular reports to DOJ.

• Novartis’ conduct was serious and occurred over a three-year period and involved high-level sales and business unit personnel;

• In March 2016, Novartis resolved FCPA accounting allegations with the SEC relating to similar conduct in China.

Given the cooperation and remediation credit, but because Novartis was involved in similar conduct in March 2016, DOJ awarded Novartis a 25 percent deduction from the midpoint (as opposed to the bottom) of the applicable Sentencing Guidelines range.

Alcon

• Alcon did not receive voluntary disclosure credit because its disclosure was untimely and made under imminent threat of disclosure to DOJ.

• Alcon received full credit for its cooperation, including conduct of a thorough internal investigation, factual presentations to DOJ prosecutors and producing extensive documentation in compliance with foreign data privacy laws. 

• Alcon engaged in remedial measures, including implementing revised and enhanced policies and procedures relating to, among other things, accounting, anti-corruption, payments to third parties, gifts, travel, and entertainment; conducting internal reviews and investigations, including site visits, audits and risk assessments; terminating high-level executives and disciplining other employees and terminating its relationship with third-party distributor involved in illegal conduct.

• Based on Alcon’s  remediation and compliance programs, DOJ did not impose an independent compliance monitor; instead, Alcon will have to submit regular reports to DOJ.

• Alcon’s conduct was serious and occurred over a three-year period and involved senior level executives.

Given the cooperation and remediation credit, and the absence of any prior offenses (unlike Novartis), DOJ awarded Alcon a 25 percent deduction from the bottom of the applicable Sentencing Guidelines range.