AstraZeneca: Speaker Fees for Speeches That Never Happened

In the AstraZeneca FCPA case, the company agreed to pay more than $5 million to settle Securities and Exchange Commission charges over improper payments to government health care providers in China and Russia and the false expenses that hid them. The SEC described fake tax receipts that generated cash for doctors, speaker fees for engagements that never happened, and charts tracking the officials who could influence pharmaceutical sales. For someone inside a sales team, speaker program or finance department, those are recognizable business records with a very different purpose.

The Commission announced the Foreign Corrupt Practices Act settlement on August 30, 2016. Its administrative order addressed the Foreign Corrupt Practices Act’s recordkeeping and internal accounting controls provisions. AstraZeneca, a U.K.-based biopharmaceutical company with securities traded in the United States, was responsible for consolidated accounts that included its local businesses.

When the Customer Controls Public Healthcare Purchases

The commercial opportunity behind pharmaceutical bribery is the doctor’s influence over prescriptions, purchases and access to approved drug lists. In AstraZeneca’s case, the Commission alleged that sales and marketing staff and multiple levels of subsidiary management designed or authorized benefits meant to reward or influence purchases. The recipients worked at state-owned or state-controlled healthcare institutions.

A 2015 SEC enforcement speech, FCPA, Disclosure, and Internal Controls Issues Arising in the Pharmaceutical Industry, explains the business setting. Pharmaceutical representatives regularly deal with doctors, pharmacists and public-hospital administrators who decide what those institutions buy. The speech distinguishes payments to induce prescriptions from payments to get a drug onto an approved list. That distinction matters inside a sales organization: a physician may influence an individual prescription, while a listing can influence access to the institution’s business.

China Turned Expense Claims Into Cash

The Commission alleged that AstraZeneca’s China sales staff used cash, gifts and other benefits to induce purchases or prescriptions from 2007 through 2010. AstraZeneca’s China sales subsidiary handled the company’s sales and marketing in China, and managers within its business units allegedly helped design and implement the payment schemes.

Some of the most revealing records the Commission described came before the expense claim. According to the order, sales staff and managers maintained charts and schedules of forecast or actual payments, including gifts, entertainment and maintenance fees. Some payments concerned individual physicians; others concerned a hospital or medical department designated by a physician. Managers approved them expecting increased purchases or favorable treatment on formulary or reimbursement drug lists.

The alleged scheme turned expense claims into cash. The Commission said employees submitted fake fa piao, or tax receipts, and managers knowingly approved the fraudulent reimbursements. A collusive travel vendor also allegedly supplied fake or inflated invoices that generated cash for healthcare providers. The order separately described bank accounts established in doctors’ names as part of an improper payment scheme.

The tax receipt supports the reimbursement, but the sales schedule can explain who the money was intended to influence and what the company expected in return. We would want to understand both records together, along with the manager’s approval.

Speaker Contracts Without the Speech

The SEC alleged that AstraZeneca’s China business paid speaker fees under incomplete service contracts that omitted a meeting date, venue, subject or fee. Its account reaches beyond missing paperwork:

The order also said sales and marketing staff could bypass the designated signatory in the electronic approval system. We see a remarkable speaker program here: no date, no venue and, in some instances, no speech. The missing event and the bypassed approval explain why an insider who knows the program can add something the booked expense never reveals.

The China allegations also reached officials outside the prescribing chain. In connection with local government inquiries in 2008, the Commission said subsidiary employees paid officials cash to reduce or dismiss proposed financial sanctions against the business. Here the alleged purchase was relief from an official decision, rather than a doctor’s next prescription.

Russia Tracked Which Doctors Could Move the Business

In Russia, the Commission alleged that employees provided improper incentives to government-employed health care providers from at least 2005 through 2010. The Russian charts allegedly recorded providers’ names, practice regions, influence over purchasing decisions and ways they could be motivated through gifts, conference support or other benefits. The Commission said managers at several levels directed or condoned these practices across multiple regions. These were records about a provider’s power over business and the benefit expected to move it.

For a sales or conference-program insider, that makes the relationship between the invitation and the purchasing decision especially important. A provider-tracking chart can explain why a particular doctor was valuable to the company. The payment and approval records can show how that value translated into a benefit. AstraZeneca’s Russian allegations put those connections at the center of the story.

The False Expense Reached the Parent’s Books

The SEC’s accounting findings concerned two failures: how the payments were described and how the company controlled them. For books and records, the Commission found that the subsidiaries mischaracterized improper payments as legitimate expenses. According to the order, those descriptions reached AstraZeneca’s consolidated financial statements.

The internal controls finding addressed the machinery that let the payments through. The Commission found weaknesses in expense approvals and vendor oversight, alongside inadequate training for sales and marketing staff. Its findings included the failure to enforce electronic approval requirements for sponsorships in China.

The order said AstraZeneca had a written policy against improper payments. The Commission nevertheless found that the company failed to employ reasonable controls to detect and prevent them. A prohibition on paper did little for the person processing an unsupported reimbursement if management approved it and the money kept moving.

The subsidiary-to-parent accounting connection gives finance staff a distinct view of the conduct. Sales records may describe the expected commercial return, while the accounting entry presents the same payment as an ordinary business cost. The useful evidence is the connection between those descriptions and the people who approved them.

What a Pharmaceutical Insider Can Connect

The AstraZeneca order describes evidence across sales, vendors, approvals and accounting. A sales employee may know why a doctor was selected, a speaker-program employee whether the event happened, and a finance employee who approved the invoice. We work through those connections with the insider who can explain what the expense entry leaves out.

The SEC’s pharmaceutical speech identifies vendor review, expense controls and internal audits as practical checks on payments, and explains how intermediary cash flows can obscure a bribe as a legitimate expense. Someone who knows the provider relationship or the actual event may be able to explain what an invoice alone leaves out.

The Payment Terms and the Cooperation Credit

AstraZeneca agreed to return $4,325,000 in profits and pay a $375,000 civil penalty. We see a striking gap between the profits the Commission ordered returned and the smaller penalty imposed on top. The order expressly tied its decision not to impose a larger penalty to AstraZeneca’s cooperation.

The company had not self-reported the violations, according to the Commission. The order credited AstraZeneca with providing information from its internal investigation, translations of key documents and facts the agency could not readily have discovered independently.

The order also credited a centralized compliance program, revised controls over health care provider interactions and third parties, and enhanced training and audits. Those changes addressed the same areas where the Commission had described failures: the expense, the vendor, the approval and the manager overseeing the sale.

When the Payment Changes Its Name

Novartis supplies a close pharmaceutical parallel. In its separate order concerning Novartis AG, the Commission described Greek sales employees ranking healthcare providers by prescribing preference and volume, then adjusting benefits according to the prescriptions they produced. A manager’s action plan made the expected exchange explicit:

The parallel is the sales logic recorded inside the company. AstraZeneca’s alleged payment schedules and Novartis’s provider rankings each connected a healthcare professional’s commercial value to benefits the company was prepared to provide. An expense label can obscure that exchange. A sales plan can make it plain.

Fresenius Medical Care illustrates how a payment can survive a compliance prohibition. Its SEC order described an executive approving payments through a transport vendor after compliance prohibited use of a Serbian agent. The 2022 Journal of Forensic and Investigative Accounting study Fresenius Medical Care: A Case Study on the FCPA identifies the same switch in payment route and concludes that managers and employees circumvented controls despite flagged transactions and policies.

That comparison gives AstraZeneca’s approval failures a practical meaning. We examine who benefited and what business decision the payment was meant to influence, even when a new vendor or expense category changes how it appears in the accounts.

The Whistleblower Program Follows the Conduct

Information about foreign bribery can support an SEC whistleblower award. Separately, for fraud against U.S. government money, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work through the appropriate program with you based on the transactions and decisions you know.

You Know What the Expense Was For

If you know why a doctor received a payment, why a speaker contract lacked an event or who approved a false reimbursement, speak to one of our whistleblower experts about what those payments bought. We connect your knowledge of the pharmaceutical business to the payment evidence, bring in pharmaceutical foreign-bribery whistleblower lawyers, and stay beside you as we build your strongest foreign bribery whistleblower case.