There is a constant drumbeat of daily news about Russia and investigations of possible collusion to fix the election. Also, following the release of the “Panama Papers” stories about Russian corruption and offshore moneys leading to friends of Vladimir Putin added to the fuel of interest in the Russian way of business. As a result, independent Counsel Robert Mueller will have lots of leads from the information previously released by the investigative media which may connect to his investigation of meetings by election officials with Russian representatives.
Interestingly, a large number of U.S. companies not only still do business in Russia, but they own subsidiary companies there and those companies are doing quite well. However, a look at cases investigated and settled by either the Securities and Exchange Commission (SEC) or the Department of Justice (DOJ) reveals that many of the companies doing business in Russia are settling cases alleging that they have been paying substantial bribes to government officials in violation of the Foreign Corrupt Practices Act (FCPA). Also, there is another trend and that is that whistleblowers, seeking the allowed 15-30% reward of what the U.S. recovers are bringing forth cases under the False Claims Act (FCA) allowing for citizens or non-citizens to file cases on behalf of the government when they reveal new info not known by the Government. Because the whistleblowers are insiders with detailed information, often presenting supportive emails and document to corroborate their cases, the fact of cases alleging bribes to Russian officials is no longer uncommon.
What companies have settled such cases in recent years?
Teva Pharmaceutical, the global generic drug manufacturer paid $519 million to settle both civil and criminal charges that it paid bribes to foreign government officials in Russia, according to the S.E.C. According to the Complaint, Teva, the largest generic drug manufacturer in the world paid the bribes from 2010 to Dec. 2012. The Complaint says that the company paid $197,530,681 to obtain or retain business in Russia. Teva used a Russian national official and entities owned or controlled to sell pharmaceuticals to Russian government entities including the MS drug Copaxone. In 2003 the Russian official became a high-ranking government official in the Russian Federation where he remained until March 2013. According to internal company emails, Teva knew that the Russian official was a government official. Through these payments, the Complaint states that Teva obtained or retained over $197 million of Russian business.
Analogic Corporation, the Massachusetts based medical device manufacturer paid $15 million to settle parallel SEC and DOJ investigations after its Danish subsidiary funneled over $16 million to its Russian distributor in bribes, according to the SEC Complaint. As a result, the company was able to sell its ultrasound equipment there. Payments were directed to shell companies in Belize, the British Virgin Islands, Cyprus and Seychelles to specific individuals in Russia, the Complaint says. Over the period of alleged wrongdoing, the company recorded approximately $21.6 million in revenue on its sales to the Russian distributor.
AstraZeneca, the UK biopharmaceutical company paid $5 million to settle charges it paid foreign bribes in Russia and China. According to the SEC Complaint from at least 1005-1020 AstraZeneca Russian employees provided bribes to government employees in connection with the sale of its products in Russia.
Many more companies which are either U.S. companies or companies publicly traded here have paid bribes to do business in Russia. Tomorrow, I will list some of the larger companies which have done so according to the S.E.C. or D.O.J.
Jeffrey Newman represents whistleblowers.