The Securities and Exchange Commission announced today that it has filed a complaint in federal court seeking a civil penalty against Schering-Plough Corporation, for violating the books and records and internal controls provisions of the Foreign Corrupt Practices Act. The Commission's complaint alleges that, between February 1999 and March 2002, one of Schering-Plough's foreign subsidiaries, Schering-Plough Poland, made improper payments to a charitable organization called the Chudow Castle Foundation. The Foundation was headed by an individual who was the Director of the Silesian Health Fund during the relevant time. The health fund was a Polish governmental body that, among other things, provided money for the purchase of pharmaceutical products and influenced the purchase of those products by other entities, such as hospitals, through the allocation of health fund resources. According to the complaint, Schering-Plough Poland paid 315,800 zlotys (approximately $76,000) to the Chudow Castle Foundation to induce the Director to influence the health fund's purchase of Schering-Plough's pharmaceutical products.

The complaint alleges that none of the payments made by Schering-Plough Poland to the Foundation was accurately reflected on the subsidiary's books and records. The complaint also alleges that the company's system of internal accounting controls was inadequate to prevent or detect the improper payments. Without admitting or denying the allegations in the complaint, Schering-Plough consented to pay a $500,000 civil penalty.

In a related enforcement action announced today, Schering-Plough consented, without admitting or denying the Commission's findings, to the issuance of a Commission Order requiring Schering-Plough to cease and desist from committing or causing violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. Schering-Plough also was ordered to comply with its undertakings to retain an independent consultant to review the company's policies and procedures regarding compliance with the Foreign Corrupt Practices Act and to implement any changes recommended by the consultant. (Rel. No. 34-49838; File No. 3-11517).

The Commission's investigation is continuing as to others.

SEC Complaint in this matter