A Risky Business Model in China Costs Cardinal Health $8.8M

Ohio-based healthcare company Cardinal Health has settled SEC charges claiming the company violated the FCPA’s internal controls and recordkeeping provisions for $8.8 million. According to the SEC’s order, a Chinese subsidiary acquired in 2010 regularly authorized and made improper payments to government officials through marketing accounts it maintained and operated for a customer. “The lesson from this is to do ABAC due diligence on acquisitions,” especially for U.S.-listed companies, said Susan Munro, a partner at Steptoe & Johnson in Beijing, “but this type of diligence is very important in any event.” See “Revisiting the China Initiative: Will the Focus on FCPA Prosecutions of Chinese Companies Produce Results?” (Jul. 10, 2019).

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