National Whistleblower Day

Alexion, a Boston-based pharmaceutical company, agreed to pay $21.5 million to settle charges it violated the Foreign Corrupt Practices Act (FCPA). A settlement, announced by the Securities and Exchange Commission (SEC), alleges that the company’s foreign subsidiaries in Turkey and Russia paid government officials to promote their drugs and that their Brazilian and Columbian subsidiaries contracted third parties to create inaccurate financial records. Alexion’s internal accounting service either did not detect these misappropriations or did not report them. The complaint revolves mostly around bribes paid for better treatment of Alexion’s flagship drug Soliris. Soliris is an immunosuppressant drug used to treat patients with rare and life-threatening immune system disorders.

Alexion Turkey allegedly bribed Turkish government officials to approve patient subscriptions for Soliris and to receive better regulatory treatment. Allegations against Alexion Russia accuse it of bribing officials to increase the total prescriptions of Soliris and to increase the government’s budget for the drug. The Brazilian and Columbian subsidiaries of Alexion allegedly failed to maintain their accounting records to a high standard, which is often a way to conceal bribes or kickbacks to officials or other illicit activity. The FCPA, usually regarded as just an anti-bribery law, also holds foreign companies to a very high standard of accounting, often imposing penalties in the millions of dollars for a single violation. The FCPA covers any company that trades on U.S. stock exchanges or trades in American Depository Receipts. Thus, giving the FCPA an extremely broad reach. Penalizing companies for opaque bookkeeping is essential in closing loopholes that companies often exploit. This settlement affirms the FCPA and the Dodd-Frank Act’s importance and effectiveness in fighting corruption not just in the U.S. but also in international business.

FCPA whistleblowers are essential to root out and prosecute foreign bribery and corruption. Although there is no mention of a whistleblower, in this case, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity. The SEC could not pursue allegations, such as those in this case, of FCPA violations without whistleblowers. Whistleblowers who provide the government with information that aids in the disgorgement of more than $1 million are eligible for 10 to 30% of the total funds recovered.