[e-drug] BMS to pay nearly $800m for accounting practices

["E-Drug" <e-drug@healthnet.org>]

E-DRUG: BMS to pay nearly $800m for accounting practices
--------------------------------------------------------
[Time for a 2nd edition of John Braithwaite's "Corporate crime in the pharmaceutical industry"? The 1st edition (published in 1984) seems in need for an update. Who was recently talking about Corporate Social Responsability? Copied as fair use. WB]

Bristol-Myers Seen Settling Case by U.S.
New York Times June 6, 2005

By STEPHANIE SAUL
The drug maker Bristol-Myers Squibb is expected to agree to pay nearly
$300 million to end a Justice Department criminal investigation of its
accounting practices, according to people briefed on the prospective
settlement.

If a deal is reached, the penalties paid by Bristol-Myers will total about
$800 million. That would include civil settlements of $389 million reached
with investors in the last year and fines by the Securities and Exchange
Commission of $150 million.

The company is expected to take a large charge to pay the Justice
Department settlement, probably this quarter, which would affect its
operating profit. But a penalty of the size anticipated in this week's
settlement is not likely to jeopardize Bristol-Myers's annual dividend,
analysts have said.

The agreement, which could be formally announced as early as tomorrow,
would help close a bleak chapter in the company's 118-year history. During
the investigation, which began in 2002, federal agents paid early-morning
visits to the homes of retired executives, interviewed more than 100
current and former employees, and pored over boxes of Bristol-Myers
documents.

In addition to the payments, the agreement with prosecutors is said to
require that the company - a producer of drugs, medical devices and
over-the-counter health products - establish government-supervised
compliance and disclosure and ethics programs to prevent the type of
accounting manipulations that prompted the investigation.

The accusations against the company involved a practice known as "channel
stuffing." Under the practice, Bristol-Myers paid incentives to its
wholesalers to stockpile inventory, making it appear as if the company's
sales were higher than they actually were. Then, Bristol-Myers reported
the inflated revenue figures to investors.