No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights

4 Clear Messages from the BMS FCPA Enforcement Action

by Michael Volkov
October 19, 2015
in Uncategorized
4 Clear Messages from the BMS FCPA Enforcement Action

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.

The SEC’s FCPA enforcement action for $14.6 million against Bristol-Myers Squibb (BMS) provides a textbook example of how things can go wrong in China.

For the compliance practitioner (as well as CEO and senior executives) in the pharmaceutical and medical device industries, the BMS enforcement action should be read and digested as a quick checklist of important principles.

The facts underlying the BMS enforcement action are fairly common when it comes to China and pharmaceutical companies. Health care professionals (HCPs) demand gifts, cash, gift cards, conference sponsorships, speaking fees and other benefits in exchange for prescriptions. The headline is pretty basic – no gifts, no prescriptions.

BMS employees responded to this demand.  They used fake invoices, receipts – which are easy to secure in China – and other sources of cash to fund this bribery program. BMS employees had little difficulty in getting the cash they needed and paying the bribes that were required to keep their sales growing and meet significant sales requirements.

This bribery scheme continued without any real concern, even when senior executives, as well as the audit committee, were warned about potential problems, as well as weaknesses in BMS’ controls in China governing such expenditures. There was no evident commitment to a culture of compliance; if anything, the incentives and the controls that were in place and never remedied communicated an implicit culture of non-compliance and sales at any cost.

The SEC’s enforcement action sends out some clear messages on the compliance front. They include:

Implement a prospective pre-approval expense process. Throughout the BMS bribery scheme, bribes were funded through retrospective reimbursement requests. Managers and employees submitted fake invoices and receipts to fund the bribery scheme. China has a notorious black market for fake receipts and they are easy to obtain and then use for reimbursement purposes. A prospective, pre-approval requirement establishes a basic framework for examining, verification and documentation of a specific expenditure. As part of its remediation, BMS instituted a 100 percent pre-approval expenditure requirement process.

Require remediation of internal audit findings. BMS’ internal audits identified serious weaknesses in BMS’ controls in China, particularly with respect to gifts, meals, entertainment, speaker conferences and physician payments. It is clear that, notwithstanding these findings, the internal audit function did not have a mandate to require appropriate remediation of findings and actions to be taken.

When problems occur or are identified, corporate leadership, legal and compliance must respond. Despite numerous notifications to senior managers and even the audit committee about potential problems in China, no one acted to investigate or even respond to the problem. Such evidence is damning for a company and subjects individual actors to potential criminal liability.

Robust compliance requires resources. BMS’ bribery scheme continued in a corporate culture where compliance had inadequate resources. As noted by the SEC, for much of the time of this activity, BMS did not have a compliance officer located in China. Instead, a compliance officer responsible for China was based in the United States and traveled only one time to China. Companies have to assign additional compliance resources, and especially assign them to specific regions. On-site compliance officers are more effective in building important relationships, monitoring corporate culture and offering their assistance to management. It is clear that BMS had no desire to expend resources on compliance and assign any resources to the China operation, notwithstanding the size and revenues generated in China.


Tags: Tone at the Top
Previous Post

LUCY V 2.4 Phishing Server Becomes First Cybersecurity Tool To Simulate and Defend Against Macro Malware Attacks

Next Post

Observations on the Short-Term/Long-Term Debate, Part 2

Michael Volkov

Michael Volkov

Michael-Volkov-leclairryan Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at mvolkov@volkovlaw.com. Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues. Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for five years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice. Michael also maintains a well-known blog: Corruption Crime & Compliance, which is frequently cited by anti-corruption professionals and professionals in the compliance industry.

Related Posts

personnel management

Preparing for Budget Cuts in 2023? Be Sure Personnel Management Isn’t on the Chopping Block

by Vera Cherepanova
March 1, 2023

For compliance departments that need to do more with less, it’s tempting to lean into automated systems. Compliance and ethics...

boris johnson resigns as UK prime minister

Them’s the Breaks: What Companies Can Learn From Boris Johnson’s Downfall

by Miller & Chevalier
July 27, 2022

Embattled Prime Minister Boris Johnson resigned after a revolt in his own party. While the political repercussions of Johnson’s tenure,...

Corporate Liability Reform in the UK is Accelerating: Your GRC Teams Need to Future-Proof Compliance  

Corporate Liability Reform in the UK is Accelerating: Your GRC Teams Need to Future-Proof Compliance  

by Fabio Feretti and Sarah Wrigley
March 30, 2022

The UK’s just-enacted corporate crime legislation is a step in the right direction but failed to address a wide range...

Making Money Is Not a Mission: 10 Essays on the Compliance Culture Revolution From Michael Volkov

Making Money Is Not a Mission: 10 Essays on the Compliance Culture Revolution From Michael Volkov

by Corporate Compliance Insights
February 11, 2022

As broad terms like "culture" continue to gain devotees, it may seem natural to conclude that more businesses and organizations...

Next Post
Observations on the Short-Term/Long-Term Debate, Part 2

Observations on the Short-Term/Long-Term Debate, Part 2

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT