Tag Archives: FCPA

Are doctors ready to fight corruption?

If you are reading this blog post, chances are that you are working for a pharma or med-tech company. If so, you are probably spending a sizeable portion of your time ensuring that such company does not get involved in corruption (even more so, if your role specifically entails the duty of complying with the United States Foreign Corrupt Practices Act (FCPA), the United Kingdom Anti Bribery Act (ABA), or Italian 231 legislation).

The fight against corruption can often feel lonely and unrewarding. While the mission of instilling ethical principles into the company’s money-making activities may be inspiring, the day-to-day reality of compliance can, at times, feel disheartening.

Sometimes “compliance” seems at odds with “business”. Compliance people need to emphasize pessimistic worst-case scenarios, which at times appear to be completely opposed to the bright optimistic viewpoint of business people. Often compliance is confined to saying “NO”, when the sales people repeat, over and over, “BUT OUR COMPETITORS ARE DOING IT!”

Here are a few reasons why you should never, ever!, give up.

  • You are doing this for your company.

While you may be, in fact, stopping or delaying certain sales of your company, you are truly protecting the company from the horrendous sanctions that it could suffer under the FCPA, the ABA or 231 legislation. Anybody within your company should be grateful since you are ultimately saving the company’s existence. As a result, you are saving the jobs of the company’s employees.

  • You are helping your fellow citizens.

Corruption has a cost. Many entities, like Transparency International and its Italian chapter, have attempted to measure it. Certain sources estimate that corruption costs 20% of the total health expenses of a country. Eradicating corruption would thus mean a more efficient national health system, which would turn into more health services… and less taxes.

  • You are not alone.

Bribes can be offered by companies, but can also be requested by doctors. For a long time life sciences’ companies were interacting with doctors (who are public officials, under Italian law) who seemed to have a low sensitivity to corruption risks, as well as very little sympathy for compliance procedures of such companies. While companies in Italy had seriously started their anti-corruption battles about a decade ago, it seemed that doctors lagged behind.

This may now be changing as doctors are taking an active role in fighting corruption. In Italy, for instance, entities like Transparency International Italia and AGENAS have been working to involve doctors, too. On February 22, 2017 the medical societies Associazione Italiana Medici (AIM), Segretariato Italiano Giovani Medici (SIGM) and Segretariato Italiano Studenti in Medicina (SISM) have publicly endorsed the initiative “Cure Corruption”. Diabetologists (Associazione Medici Diabetologi (AMD) have also recently pointed to the close connection between sustainability of the health system and ethical interactions among its players (see the remarks by Maria Franca Mulas).

This is a very welcome development, as synergies between public administration, companies and doctors could really step up the fight against corruption and prompt a cultural change that will help the health system as a whole.

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Italian Corporate Criminal Liability 101: Basic Facts You Should Know

Are Companies Criminally Liable under Italian Law? Yes!

Legislative Decree no. 231/2001 (the “231 Decree”) has introduced in Italy the principle that companies are responsible for crimes committed by:

  • Individuals vested with powers of company’s representation, control, direction, or management;
  • Individuals subject to the authority or control by the above-mentioned individuals, including employees, consultants, non subordinate employees and whoever acts on behalf of the company.
  • As a result, a company may now be considered liable for crimes committed by individuals in the interest or to the benefit of the company (while crimes committed by individuals in their exclusive interest or in the exclusive interest of third parties do not trigger company’s liability). The company’s liability is separate and distinct from the liability of the individual who committed the crime.

Which Crimes Trigger Liability? Several (not just corruption!).

The 231 Decree lists a number of crimes for which companies may be liable, which include:

  • Corporate crimes;
  • Crimes against public administrations;
  • Crimes against the dignity of individuals;
  • Conspiracies and terrorism;
  • Crimes arising out of breach of laws protecting the environment and health and safety at work;
  • Crimes related to criminal associations;
  • Money laundering.

Which Sanctions Apply? Monetary and blacklisting sanctions.

If a company is found liable, the following sanctions may apply:

  • monetary sanctions up to a maximum amount of Euro 1,549,370.69 (and precautionary seizure of the price or profit arising from the crime),
  • blacklisting sanctions (applicable also as a precautionary measure), with duration between 3 to 24 months, which can consist of, inter alia, the prohibition to conduct the Business’ commercial activity, the prohibition to contract with the public administration, the prohibition to advertise goods or services, seizure, or the publication of the court’s decision (if a blacklisting sanction is applied).

Are There any Grounds of Exemption from Criminal Corporate Liability?  Yes!

A company is not liable pursuant to the 231 Decree if it proves that:

  1. The management has adopted and effectively implemented a so-called Organizational Model’ in order to prevent the commission of the criminal offences listed in the 231 Decree by subjects acting on behalf of the company;
  2. The company has established an internal body (‘Compliance Committee’) entrusted with the task of supervising the proper functioning and update of the Organizational Model, as well as the actual compliance by all those who must abide by it;
  3. Crimes were committed by individuals vested with management powers who have fraudulently avoided compliance with the Organizational Model;
  4. The Compliance Committee has not omitted to perform, or negligently performed its supervision duties.
  5. This explains why companies operating in Italy typically devote substantial resources in the setting up of an Organizational Model.

How to Set up an Organizational Model?  Risk assessment, gap analysis, preventive measures.

In order to prepare an Organizational Model the following process is usually followed:

  1. Examination of areas of risk: on the basis of the company’s Organizational Model and relevant job descriptions, the risk of commission of each crime set forth in the 231 Decree is assessed.
  2. Analysis of existing procedures: all existing procedures and ethical principles are reviewed in order to identify procedures that may reduce the risk of commission of the crimes.
  3. Possible implementation of new measures: should the analysis of existing procedures lead to conclude that some of the risks are not properly reduced, new procedures should be implemented.

The Organizational Model must be Effective A compliance program on paper will not help!

Once a company has adopted an Organizational Model by means of a resolution of the Board of Directors, the company must ensure that it is effectively implemented, that employees and other individuals acting on behalf of the company are duly trained on the model and that any breach of the Model is sanctioned.

In particular, the appointed Compliance Committee must actively supervise the effective functioning and adequacy of the Model on an ongoing basis and in independent fashion. The Compliance Committee is generally in charge of:

  • Monitoring the activity carried out within the company and the areas considered at risk;
  • Assessment of the actual implementation of, and compliance with the Organizational Model;
  • Cooperation and consultation with the management as regards the application of disciplinary sanctions to employees in the event of breach of the internal procedures provided by the Organizational Model.