The U.S. Securities and Exchange Commission charged pharmaceuticals giant Eli Lilly & Co. (NYSE:LLY) with violations of the Foreign Corrupt Practices Act Thursday, alleging that the company's subsidiaries made improper payments to government officials in Russia, Brazil, China, and Poland in order to win millions of dollars worth of contracts in those countries.
In the case of Russia, for example, the SEC alleged that Lilly's Russian subsidiary paid millions of dollars to third parties outside the country for "marketing" services that were only rarely actually performed. Instead, the third parties apparently funneled the monies received to government officials as bribes to help obtain government business for Lilly's subsidiary. The SEC further alleges that Lilly permitted these practices to continue for five years after first becoming aware of the situation, and that similar practices were followed in each of Brazil, China, and Poland in order to win government contracts.
Simultaneously, with the SEC officially leveling these charges, Lilly agreed to pay the SEC $29.4 million in fines to settle the charges. The company further agreed to a consent decree whereby it would retain an independent consultant to review the company's FCPA procedures, and make recommendations to enhance its internal financial controls.
Shares of Lilly closed Thursday at $49.25, up 0.7%.
Fool contributor Rich Smith has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.