HONEST MISTAKES OR CORPORATE FRAUD?
HONEST MISTAKES OR CORPORATE FRAUD? - UP TO 25% OF THE STATE EXPENDITURES FOR PHARMACEUTICALS ARE LOST DUE TO FRAUD AND CORRUPTION
The head office of the international pharmaceutical company “Eternity” (hereinafter referred to as “Eternity”) received a hot-line anonymous message about sales managers discriminating against some authorized distributors in a certain Russia’s region by distributing a life-saving medication (LSM) “Panacea”. Furthermore, they provided examples of skyrocketed personal expenses of the sales managers in that region, as well as the complaints of other distributors who had been frequently refused operations by the Eternity sales managers by reason of the LSM allegedly being not in stock.
According to the communicant, the LSM “Panacea” had been purchased in the preceding year by the public healthcare facilities in that region under a competitive tender for the LSM “Panacea” delivery won by a distributor Pharmamaker. Despite the fact that there were a number of “Panacea”’s branded equivalents produced by other pharmaceutical companies, none of the other participants in that public tender could be more successful than Pharmamaker, their sometimes more attractive pricing proposals notwithstanding.
The head office administration initiated the internal investigation for checking the facts mentioned by an anonymous communicant and, correspondingly, detecting eventual violations of anti-corruption laws (in particular, FCPA).
As a result of the investigation, we have detected the collusion between the Eternity regional branch managers and medical officers of the public health facilities, who were secretly remunerated (honorarium for plagiarism) for public purchases of the LSM “Panacea” previously offered to the Powderpill health facility as a joint ‘donation’ of the Eternity and a direct distributor Pharma-Maker.
At present, a criminal case against the involved medical officers has been opened under the Article 159, part 4, while the Eternity has to continue investigation for detecting new episodes of such criminal practice, evaluating the corruption business volume at its regional branch and, consequently, calculating the penalty to be paid according to anti-corruption laws (in particular, FCPA).