Merck (MRK) disclosed in its quarterly 10-Q filing that it is the subject of an investigation by the Department of Justice and the SEC for possible violations of the Foreign Corrupt Practices Act (which prohibits paying bribes to do business in foreign countries). The investigation comes with a bit of unspoken history — and some potential risk created by Merck’s recent acquisition of Schering-Plough.
Merck says “this inquiry is part of a broader review of pharmaceutical industry practice.” That’s true: at least 10 other companies are suspected of doing the same thing, and an 11th — SciClone (SCLN.O) popped up Tuesday.
However, the fuller context is that the letters are more serious than a “review.” A DOJ assistant attorney general warned an assemblage of pharma industry lawyers last year that DOJ “will be intensely focused on rooting out foreign bribery in your industry.” A similar criminal investigation has already led to the imprisonment of one executive at Johnson & Johnson (JNJ) in the U.K., and J&J admitted in its most recent 10-Q that it had violated anti-corruption laws and that investigations are under way in several nations, including the United States.
via Acquisition May Create Headaches for Merck in Foreign Corruption Probe | BNET.
