Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, May 12, 2009

Novo Nordisk Settles FCPA Charges

The SEC settled Foreign Corrupt Practices Act books and records and internal controls charges against Novo Nordisk, a Danish company that specializes in the manufacture and development of pharmaceutical products and is a leading supplier of insulin worldwide. The Commission's complaint alleged that from 2000 through 2003, Novo Nordisk paid $1,437,946 in kickbacks and agreed to pay an additional $1,315,454 in kickbacks in connection with its sale of humanitarian goods to Iraq under the United Nations Oil for Food Program (the "Program"). The kickbacks were characterized as "after-sales service fees" ("ASSFs"), but no bona fide services were performed. The Program was intended to provide humanitarian relief for the Iraqi population, which faced severe hardship under international trade sanctions. The Program required the Iraqi government to purchase humanitarian goods through a U.N. escrow account. The kickbacks paid by Novo Nordisk diverted funds out of the escrow account and into Iraqi-controlled accounts at banks in countries such as Jordan.

Novo Nordisk, without admitting or denying the allegations in the Commission's complaint, consented to the entry of a final judgment permanently enjoining it from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and ordering Novo Nordisk to disgorge $4,321,523 in profits plus $1,683,556 in pre-judgment interest, and a civil penalty of $3,025,066. Novo Nordisk will also pay a $9,000,000 penalty pursuant to a deferred prosecution agreement with the U.S. Department of Justice, Fraud Section. The Commission considered remedial acts promptly undertaken by Novo Nordisk and the cooperation the company afforded the Commission staff in its investigation.

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