Johnson & Johnson settles U.S. bribery charges

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney) -- The Securities and Exchange Commission on Friday charged Johnson & Johnson with bribing doctors in several countries to prescribe its drugs and medical devices.

The company has agreed to pay $70 million to settle the charges, without admitting or denying the allegations.

This is the latest setback amid mounting problems for the pharmaceutical giant. Johnson & Johnson's (JNJ, Fortune 500), drugmaking arm McNeil Consumer Healthcare is already under federal supervision due to numerous recalls of its Tylenol and other non-prescription medicines over the past year.

J&J also faces numerous lawsuits files by patients who received defective hip replacement devices manufactured by its DePuy Orthopaedics unit.

The SEC alleges that since at least 1998, J&J subsidiaries paid bribes to doctors in Greece to select its surgical implants, to doctors and hospital administrators in Poland to win contracts to doctors in Romania to prescribe J&J drugs.

The agency said J&J subsidiaries also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program.

J&J subsidiaries, employees and agents used slush funds, sham civil contracts with doctors, and off-shore companies in the Isle of Man to carry out the bribery. These acts violate the Foreign Corrupt Practices Act, the agency said.

"The message in this is plain. Any competitive advantage gained through corruption is a mirage," Robert Khuzami, Director of the SEC's Division of Enforcement, said in a statement.

"J&J chose profit margins over compliance with the law by acquiring a private company for the purpose of paying bribes, and using sham contracts, off-shore companies, and slush funds to cover its tracks," he said.

J&J said it hopes to reach a settlement of a related investigation by the U.K. Serious Fraud Office in the coming days.

J&J CEO William Weldon said the company reported the improper payments to the government more than four years ago and has taken full responsibility.

"We are deeply disappointed by the unacceptable conduct that led to these violations," he said, adding that the company is committed to making sure this doesn't happen again." To top of page

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