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Bristol-Myers to Pay $14M to Settle China Bribe Charges

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Bristol-Myers SquibbBMY has agreed to pay more than $14 million in fines to settle charges against its joint venture in China, which has allegedly made cash payments and provided other benefits to health care providers at state-owned and state-controlled hospitals in exchange for prescription sales, per an announcement made by the Securities and Exchange Commission (SEC).

Per the SEC order, Bristol-Myers violated the Foreign Corrupt Practices Act's (FCPA) internal controls and record keeping provisions. It was found that Bristol-Myers lacked effective internal controls over interactions with health care providers at its majority-owned joint venture, Bristol-Myers Squibb China.

Bristol-Myers Squibb China had inaccurately recorded the spending by sales representatives to secure and increase business by providing health care providers with cash, jewelry, meals, travel, entertainment, sponsorships for conferences and meetings and other gifts as legitimate business expenses in its books and records between 2009 and 2014.

Without admitting or denying the charges, Bristol-Myers has agreed to pay more than $14 million to settle the charges. The payment includes $11.4 million of profits recorded incorrectly, prejudgment interest of $500,000 and civil penalty of $2.75 million. Bristol-Myers will update the SEC for the next couple of years on the status of its remediation and implementation of FCPA and anti-corruption compliance measures.

This is not the first time bribery cases of large-cap health care companies have surfaced in China. Last year, GlaxoSmithKline's GSK Chinese subsidiary, Glaxo China Investment Co. Ltd, was found guilty of bribing non-government personnel by the Changsha Intermediate People's Court in Hunan Province, China. The court levied a fine of £297 million (approximately $484 million).

Bristol-Myers currently carries a Zacks Rank #3 (Hold). Some-better ranked stocks in the health care sector include AstraZeneca plc AZN and Eli Lilly and Company LLY . Both AstraZeneca and Eli Lilly hold a Zacks Rank #1 (Strong Buy).

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ASTRAZENECA PLC (AZN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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