J&J settles bribery and kickback charges

Reuters News
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Posted: Apr 08, 2011 1:39 PM
J&J settles bribery and kickback charges

WASHINGTON (Reuters) - Johnson & Johnson on Friday agreed to pay $70 million to settle U.S. charges that it paid bribes and kickbacks to win business overseas, the first big drug company to settle since the Obama administration began its scrutiny of the industry more than a year ago.

Johnson & Johnson agreed to pay a $21.4 million fine to settle Justice Department criminal charges and pay more than $48.6 million in disgorgement and interest to settle charges by the Securities and Exchange Commission, the agencies said.

The Justice Department announced in November 2009 that it would focus on prosecuting those in the pharmaceutical industry who try to bribe foreign officials for preferential treatment of their products, leading to a wide-ranging probe.

Dating back to 1998, subsidiaries of the company were accused of paying bribes to public doctors in Greece to select its surgical implants and in Romania to prescribe its medicines.

J&J units were also accused of paying bribes to public doctors and hospital administrators in Poland to win contracts and of paying kickbacks to Iraq to win 19 contracts under the U.N.'s Oil for Food Program.

Iraq had demanded that companies pay a 10 percent fee in order to do business with the Saddam Hussein government, Johnson & Johnson said in a statement.

"More than four years ago, we went to the (U.S.) government to report improper payments and have taken full responsibility for these actions," J&J Chairman and Chief Executive Officer William Weldon said in a statement.

J&J did not admit or deny the SEC's allegations but acknowledged responsibility in the Justice Department case for the actions of its units, employees and agents who made the improper payments.

Under the settlement, J&J will enter into a deferred prosecution agreement with the Justice Department.

(Reporting by Jeremy Pelofsky, editing by Lisa Von Ahn, Phil Berlowitz)