Corruption -July 25, 2020

A subsidiary and a former subsidiary of pharmaceutical company Novartis AG agreed to pay more than $ 233 million in criminal fines to end a U.S. Department of Justice [DOJ] investigation into violations of the Foreign Corrupt Practices Act.Novartis Hellas S.A.C.I [Novartis Greece] allegedly intended to bribe personnel at state hospital facilities in Greece and falsify records to hide the bribes.Similarly, multinational eye care company Alcon Pte Ltd allegedly planned to make and falsely record bribes in Vietnam.The bribes were payment for staff of state-owned and state-controlled hospitals and clinics to use Alcon products and prescribe Novartis brand pharmaceuticals. Novartis Greece and Alcon entered into separate deferred prosecution agreements with the U.S. Attorney's office agreeing to respective criminal monetary penalties of $ 225 million and approximately $ 8.9 million.

Requirements:

a.This out-of-court settlement does not require any officer, director, employee, or agent to serve a prison sentence.Is justice served?

b.In 2001, following the collapse of Enron Corporation, Congress passed Sarbanes-Oxley Act [SOX] to monitor the behavior of accounting and business.SOX established a new oversight body for the accounting profession called the Public Company Accounting Oversight Board [PCAOB].Comment on the effectiveness of SOX and its oversight body i.e., the PCAOB, in light of Novartis.Offer your personal opinion as to what should be done to encourage ethical business conduct.

c.In addition to the personal reputation of the officers, directors, employees, and agents of U.S. corporations that violate FCPA, or enter into other fraudulent activities prohibited by SOX, what about the reputation of the Corporation itself?Do we, as Americans, care about the criminal activities of corporations----does it cause us to purchase from other more or less ethical companies?What about the shareholder?What remedies does the shareholder have to hold corporate officers and directors accountable?