On February 1, 2016, SAP SE, a German software developer, reached a settlement agreement with the SEC to address allegations that it violated the books and records and internal controls provisions of the FCPA. Without admitting to or denying the allegations, SAP agreed to pay $3.7 million in profits and $188,896 in prejudgment interest to settle charges that deficient internal controls at the company permitted its former vice president of global and strategic accounts, Vicente E. Garcia, to pay a Panamanian government official $145,000 to secure business contracts, while also offering improper payments to two other government officials. After his initial request to pay the funds as a "commission" was rejected, Garcia was able to falsely record the payments as legitimate "discounts" in SAP's books. The use of such discounts was not subjected to heightened anticorruption screening, and Garcia recorded bribes as discounts from at least 2009 to 2013.
As covered in previous Red Notices, as part of a separate enforcement action in August 2015, Garcia pleaded guilty before a federal court in the Northern District of California to a single count of conspiracy to violate the FCPA. This past December, the court sentenced Garcia to 22 months in prison.
Several days later, on February 4, 2016, the SEC and SciClone Pharmaceuticals, Inc. reached an agreement to settle allegations that SciClone violated the FCPA by making improper payments to health care professionals employed by state institutions in China.
The SEC alleged that SciClone provided various gifts to health care professionals and decision-makers in China, including golf trips, vacations and meals. SciClone provided the vacations and meals for VIP clients, and also arranged for more than $8,000 in gifts to officials charged with approving pending licensing applications with the State Food and Drug Administration. All of the transactions were falsely recorded in SciClone's books and records as legitimate business expenses. Pursuant to the agreement, to which SciClone consented without admitting or denying the allegations, the company agreed to pay a $2.5 million penalty, $9.426 million in disgorgement of profits and $900,000 in prejudgment interest.
In a press release, SciClone also announced that the DOJ had completed its own investigation and "declined to pursue any action."
The SEC noted that the company had taken steps to improve its internal controls and compliance functions by, among other things, hiring a compliance officer for its China operations; disciplining employees who violate SciClone's policies; and creating an internal audit department and compliance department. SciClone is also required to provide the SEC with periodic status reports on its remediation efforts.
For more information about both of these enforcements, see the FCPA Blog here and here.
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