Friday, January 19, 2007

Two CVS Executives Indicted in R.I. Corruption Case

Two executives with drugstore chain CVS were indicted on conspiracy and corruption charges related to alleged secret payments to a Rhode Island state senator to secretly help protect the company's position in connection with legislation.  Charged in a 23-count indictment (here) are John R. Kramer and Carlos Ortiz, who worked in the company's Woonsocket, R.I. headquarters in the government affairs department and allegedly arranged for payments to former State Senator John Celona, who earlier entered a guilty plea.  According to a press release issued by the U.S. Attorney's Office (here):

The indictment alleges that Kramer and Ortiz engineered a consulting agreement in which CVS paid Celona $1,000 a month, ostensibly to improve CVS’s image among consumers.  However, the indictment alleges, Celona’s actual job was to thwart legislation deemed harmful to CVS, and to advance matters deemed favorable. The indictment alleges that Kramer and Ortiz concealed the true nature of Celona’s relationship with CVS from other CVS executives and lobbyists, and from the public.

While being paid by CVS, the indictment alleges, Celona used his position as a member of the Senate Corporations Committee, and later as its chairman, to block passage of legislation known as Pharmacy Freedom of Choice. The legislation was designed to allow any willing pharmacy to participate in a health care insurance reimbursement network. CVS was a member of what was then a restricted network with a particular health care insurer, and defeating the Freedom of Choice legislation was a primary company objective.

Celona's cooperation has already netted two former executives at Roger Williams Medical Center in Providence on similar corruption charges. (ph)

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