Mead Johnson investigating potential FCPA violations

The company said that an internal probe of a Chinese subsidiary found payments tied to product promotion

Another day, and now another company being investigated for possible bribery in what is truly becoming the comeback year for Foreign Corrupt Practices Act (FCPA) prosecution. This time, a popular baby formula maker is the one caught in the government’s crosshairs.

Mead Johnson Nutrition Co. announced on Feb. 20 that it is now investigating potential FCPA violations at its Chinese subsidiary and reporting those findings to the U.S. government.

In a securities filing, the company said that an internal probe of the Chinese subsidiary found payments tied to product promotion. These payments directly violated company policy, the filing said, and may have violated the FCPA as well.

Mead Johnson began the internal investigation in early 2013 after a document request from the Securities and Exchange Commission. The Wall Street Journal reports that Mead Johnson disclosed the probe and the document request in a release last year, but the company did not mention any potential FCPA violations at that time.

This isn’t the first time that Mead Johnson has been in trouble for dealings within its Chinese subsidiary. According to the WSJ, the company paid a $33 million penalty in 2013 after being ensnared in an industry-wide antitrust probe in China.

After the government only enacted five FCPA enforcement actions in 2013, the Act has begun to receive major consideration in courtrooms once again. Most notably, aluminum giant Alcoa received a $384 million penalty for improper dealings with Bahraini officials in early January. ATM maker NCR Corp. and Avon Products Inc. have also made the news recently for governmental FCPA investigations.

All of these cases point to one key fact: Corporate officers need to take greater care with the business they conduct in foreign countries. With more countries than ever conducting internal probes — and countries such as Brazil enacting new anti-corruption laws — the time for not complying with anti-bribery legislation has long past.

 

For more on the bribery beat, check out these InsideCounsel articles:

Avon could spend $132 million to settle FCPA investigation

Brazil’s new anti-corruption law: What you need to know

Former Siemens executives to pay record bribery fines, rules court

New strategies and technologies can limit anti-bribery spending

Contributing Author

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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