Cardinal Health has agreed to pay $8.8 million to resolve federal charges that workers of a former subsidiary in China bribed government officials.
The charges laid out Friday by the Securities and Exchange Commission are the latest in a string of issues involving the Dublin-based drug distribution and medical products company, which also has been linked to the nation’s opioid overdose crisis.
The SEC said Cardinal violated the Foreign Corrupt Practices Act, and that Cardinal’s internal accounting controls were insufficient to detect improper payments made by employees of its former Chinese subsidiary.
Between 2010 and 2016, Cardinal China retained thousands of workers and managed two large marketing accounts for the benefit of a European beauty and health company whose products Cardinal China distributed.
The employees used marketing account money meant to promote the company’s products on payments to government-employed health-care professionals and to employees of state-owned retail companies who had influence over purchasing decisions.
The SEC order found that Cardinal did not do enough to make sure the transactions were executed appropriately.
Cardinal received a percentage of profits from sales derived from the improper payments, the SEC charged.
“Cardinal’s foreign subsidiary hired thousands of employees and maintained financial accounts on behalf of a supplier without implementing anti-bribery controls surrounding these high-risk business practices,” Anita B. Bandy, an associate director in the SEC’s Division of Enforcement, said in a statement. “The (Foreign Corrupt Practices Act) is designed to prohibit such conduct, which undermined the integrity of Cardinal’s books and records and heightened the risk that improper payments would go undetected.”
Cardinal said in a statement that it sold the Chinese operation in 2018 and that it voluntarily disclosed to the Department of Justice and the SEC possible violations of the Foreign Corruption Practices Act.
“The (Department of Justice) declined to take any action against Cardinal Health and the SEC entered into a civil, administrative settlement with Cardinal Health whereby Cardinal Health, without denying or admitting to the SEC’s findings, consented to a settlement in the amount of $8.8 million,” Cardinal said.
Cardinal Health and other drug wholesalers and pharmaceutical companies have been blamed in thousands of lawsuits filed by state and local governments for the opioid crisis, which has caused more than 400,000 deaths over two decades.
Also, in January, the company told customers to stop using some surgical gowns and “procedure packs” made in a Chinese factory out of concern that the gowns might not be sterile.