SciClone Reports Possible FCPA Violations

By Joe Palazzolo

Wall Street Journal

May 10, 2011

An internal investigation by SciClone Pharmaceuticals Inc. uncovered evidence of sales and marketing activities that might violate the Foreign Corrupt Practices Act, the company said Tuesday. SciClone previously disclosed that a special committee of directors was investigating operations in China for compliance with the law, which bars foreign bribery.

The special committee found that SciClone lacked controls to ensure that third-party gifts, travel and entertainment expenses and sponsorships of certain conferences and symposia complied with the law, SciClone said in the statement.

The special committee also determined that U.S. management had inadequate information about the company’s activities in China, and that SciClone failed to fully implement a policy that ensured employees would comply with all applicable laws.

SciClone said it reported the findings to the Justice Department and the Securities and Exchange Commission, which are investigating SciClone and several other drug companies for possible foreign bribery. SciClone said it is cooperating with the agencies in their investigation.

In light of the findings, SciClone’s board denied Dr. Friedhelm Blobel, SciClone’s president and chief executive, a cash bonus for 2010. The board also docked his long-term incentive plan $150,000, for a total loss of $334,000 in 2010.

Blobel’s bonus for 2011 will be tied to his oversight in creating a new FCPA compliance policy and training program on anti-corruption laws. SciClone said it also plans to hire a senior-level compliance official who will report directly to the special committee.

Blobel said in a statement that “critical work” needed to be done to accomplish the remediation.