Cardinal Health agreed to pay about $8 million to settle claims it violated the Foreign Corrupt Practices Act, according to the U.S. Securities and Exchange Commission.
Between 2010 and 2016, a Cardinal subsidiary in China managed two large marketing accounts for a European dermocosmetic company whose products Cardinal China distributed.
Under the marketing agreement, some of Cardinal's employees directed payments to key purchasing officials while the Chinese subsidiary received a share of the profits, according to the SEC.
Cardinal also allegedly failed to maintain proper accounting books and necessary internal controls to detect bribes or provide sufficient employee training.The company inaccurately assessed the risks of the arrangement, according to the SEC.
"Cardinal's foreign subsidiary hired thousands of employees and maintained financial accounts on behalf of a supplier without implementing anti-bribery controls surrounding these high-risk business practices," said Anita Bandy, an associate director in the SEC's enforcement division.
Cardinal didn't admit or deny the SEC's findings, but agreed not to violate accounting and internal control provisions of the Foreign Corrupt Practices Act. The company will pay $5.4 million in disgorgement, about $1 million in prejudgement interest, and a civil penalty of $2.5 million.
Cardinal sold the Chinese subsidiary two years ago.
The company told Becker's Hospital Review it voluntarily disclosed to the U.S. Justice Department and the SEC possible violations of the U.S. Foreign Corrupt Practices Act and that the Justice Department declined to take any action against it.
Read the full news release here.