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DOJ Investigation of Pharma Companies for Alleged Iraqi Terrorism Funding – Did a Whistleblower Help?

Posted  August 17, 2018

Pharmaceutical companies AstraZeneca, Pfizer, Roche, and Johnson & Johnson were sued in the fall of 2017 by a group of military veterans and others who alleged that the companies paid bribes to win contracts with the Iraqi Ministry of Health – bribes which, according to the lawsuit, financed terrorism that damaged the plaintiffs.  As such, the plaintiffs alleged, the payments amounted to aiding and abetting violations of the Anti-Terrorism Act, a law which permits civil damages suits by private citizens who are victims of terrorism.  The defendants denied liability.

Now, the same pharmaceutical companies named as defendants in the private anti-terrorism lawsuit have disclosed that the Department of Justice has asked them to provide documents relating to the matter and the alleged payments.  That is, the pharmaceutical companies have disclosed that the government is investigating the allegations made in the private lawsuit.  The disclosures by Pfizer, AstraZeneca, Roche, and Johnson & Johnson came in their quarterly SEC filings.  As public companies, the pharmaceutical companies must make the quarterly filings in question, and in those filings are required to disclose, among other things, “material” legal proceedings and other factors that could have a material effect on the company’s results and financial condition.

The nature of the DOJ investigation is not clear from the companies’ disclosures.  The investigation may arise under the Foreign Corrupt Practices Act, which bars payments by U.S.-regulated companies that are intended to induce or influence a foreign official to use his or her position to assist a company in obtaining, retaining, or securing any kind of business advantage.  The SEC and DOJ share authority to investigate alleged violations of the FCPA and to enforce its provisions. Violations of the FCPA can be reported to the SEC by whistleblowers under the SEC Whistleblower Reward Program, which provides that whistleblowers can receive up to 30% of any government recovery based on the information that the whistleblower provides.

Although the plaintiffs in the underlying Anti-Terrorism Act case are not company insiders, they may have filed an SEC whistleblower claim presenting their evidence of the allegedly unlawful payments; whistleblowers do not need to be company insiders.  Alternatively, the publicity surrounding the private lawsuit may have prompted company insiders to make a whistleblower submission.  While the allegations of bribery were public as a result of the private lawsuit, the SEC Whistleblower Program provides that whistleblowers may be eligible for an award if they voluntarily provide additional information that aids an investigation.

Of course, it may also be the case that the government undertook its investigation of the pharmaceutical companies without having received a whistleblower submission.  Regardless of whether a whistleblower submission prompted the now-disclosed DOJ investigation of the pharma company payments, this situation offers an illustration of the ways in which whistleblower reward laws can overlap with other available remedies.  Experienced whistleblower counsel can help clients navigate alternative remedies, advise clients on their rights under different statutory schemes, and outline the steps clients can take to preserve any rights they may have to a whistleblower reward.

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Tagged in: FCPA, Government Investigation, SEC Whistleblower Reward Program, Securities Fraud,


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