Week in Review, May 20, 2014

A new survey shows that calls to company hotlines are on the rise and a U.S. Appellate Court looks to clarify the meaning of a key term in FCPA cases.

It’s time to dust off that picnic blanket and dig the stadium chair out of the back of the closet…summer concert season is about to kick off. From county festivals to stadium shows, acts ranging from big bands to Buffet will soon be filling the warm air with the sounds of summer. Whether your tastes tend toward rock or Rachmaninoff, you’re bound to find a sound that soothes your soul again this year. While you ponder your live summer playlist, we’ll strike up the band with the compliance news you need to know for this week, with the Week in Review.

Are whistleblowers turning it up to eleven? A recent survey conducted by the Society of Corporate Compliance and Ethics (SCCE) and the Heath Care Compliance Association (HCCA) found that reports to company hotlines are on the rise. According to the survey, 37% of compliance officers say they have seen a rise in reports to hotlines and another 51% say the rate of reports remains steady. In publicly traded companies, the rise is more pronounced, with 56% of compliance officers reporting an increase in hotline calls. The CEO of SCCE and HCCA says the rise is good news, and points to employees’ willingness to come forward as evidence that their concerns will be heard objectively.

GSK, the first industry company called out in last summer’s bribery accusation parade, faced the music during a press conference this past week. The Chinese police accused the former head of GSK’s operations in China, Mark Reilly, of telling employees to pay bribes to doctors and hospitals in order increase sales. According to the police, the bribery led to higher drug prices and illegal revenue in excess of $150 million. Two other GSK executives were also accused of being involved in orchestrating the bribery scheme. The company said it was continuing to cooperate with the investigation and legal experts say the accusations against Mr. Reilly may cause some companies to rethink their investment in China.

And just when GSK thought the news in China couldn’t get worse, here comes an encore. The company is now accused of tax evasion in a Chinese legal newspaper. According to the publication, which is run by the government, the company failed to pay import duties and taxes for an HIV product between 2005 and 2008. GSK has not issued a comment.

Could an Appellate Court’s decision in an FCPA case be music to the ears of prosecutors, defense teams and companies alike? In a closely followed case, the court provided a definition of the word “instrumentality” as it pertains to who qualifies as a foreign official under the FCPA. The case hinged on that definition. The court wrote that an instrumentality is, “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.” The court went on to say that the facts of a case will determine what constitutes “control” and a “function the government treats as its own,” but did suggest there are certain factors for judges and juries to consider, such as whether the government has a controlling interest in the entity, or the ability to hire and fire the principals.

Well, that just about brings us to the end of this week’s performance. Obviously, the sound of settlements and investigations continues to fill the airwaves. Now, more than ever, the PharmaCertify™ eLearning modules, Commercial Compliance Overview and Good Promotional Practices offer a perfectly harmonized solution to compliance training challenges. Compliance Overview presents a comprehensive introduction to the critical commercial topics all employees need to understand, while Good Promotional Practices targets those in the field, highlighting the policies and best practices related to product promotion and HCP interactions.

Have a great week everyone and rock on!

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