1) F. Hoffmann-La Roche Ltd.

Type of Crime: Antitrust Criminal Fine: $500 million 12 Corporate Crime Reporter 21(1), May 24, 1999 Hoffmann-La Roche Drug manufacturer Hoffman-La Roche (called Roche in the US) has over 65,000 employees and offices in 150 countries around the world. The company has numerous laboratory and testing alliances and owns a majority share of the biotech firms Genentech and Chugai Pharma. Hoffman-La Roche is based in Nutley, New Jersey in the United States and is the specific prescription drug component of F. Hoffmann-La Roche Ltd (Roche Group). The Roche Group is a health care related international corporation that develops pharmaceuticals and other medically related products for use worldwide. Roche has resisted merger offers, most notably from competitor Novartis, also Swiss, who bought almost a third share of Roche in 2001. In 2005 worldwide officials criticized Roche's handling of its "avian flu" drug Tamiflu . Faulty batches were made due to negligent testing procedures and were later disposed. There was a massive outcry to Roche from worldwide governments to produce more avian flu vaccine or they would start breaking Roche's patent and begin making Tamiflu generically. Some governments, such as the US, are taking legal action against the company. In the 1970s Roche was implicated in a vitamin price fixing scandal in Europe where the company inflated consumer costs of vitamins in collusion with other drug making rivals. The case was the result of a Roche employee, Stanley Adams, who had handed documents over to European officials. Roche then prosecuted Adams and he was jailed for a long prison term due to Swiss laws about company whistle-blowers. Twenty years after the scandal, the US and EU regulators fined Roche for over $500 million for the same price-fixing scandal practices . Roche is also the target of several human rights campaigns and some government officials who claim that the company deliberately withheld and overpriced AIDS drugs in Africa. The controversy in the AIDS/Africa scandal also included allegations

that the company refused to allow cheaper, generic versions of their AIDS drugs to be made. Roche is the maker of the drug Accutane (Isotretinoin), a powerful acne fighting medication . Accutane has been linked to causing serious birth defects in children born to mothers on the drug. Accutane has also been linked to other severe side effects including depression and suicide. The FDA instituted a new program beginning in December of 2005 in order to promote greater awareness about the potential side effects of Roche's Accutane. Roche is also the manufacturer of the drug Lariam ( Mefloquine), an anti-malarial prescription medication . Larium is linked to severe psychotic episodes, panic attacks, convulsions, epilepsy, headaches, hallucinations, paranoia, suicide attempts and homicidal rage. If you have experienced side effects, please contact an Accutane or Lariam lawyer to learn more about your legal rights. FORMER F. HOFFMAN-LA ROCHE EXECUTIVE AGREES TO PLEAD GUILTY FOR PARTICIPATING IN INTERNATIONAL VITAMIN CARTEL Second Executive to Plead Guilty, Will Serve Jail Time and Pay $150,000 Fine WASHINGTON, D.C. -- A former executive of the Swiss pharmaceutical giant F. Hoffmann-La Roche Ltd. today agreed to plead guilty, serve a five-month jail sentence, and pay a $150,000 fine for his role in an international conspiracy to suppress and eliminate competition in the vitamin industry, the Department of Justice announced. In a one-count criminal charge filed today in U. S. District Court in Dallas, the Department of Justice charged Swiss citizen and resident, Dr. Roland Brnnimann, former President of the Vitamins and Fine Chemicals Division, with conspiring with unnamed co- conspirators to fix, raise, and maintain prices, and allocate market shares of vitamins sold in the United States and elsewhere. The case also charges that the conspirators allocated contracts with customers for vitamin premixes throughout the U.S. and rigged bids for those contracts. The conspiracy lasted from 1990 until 1999 and affected vitamins A, B2, B5, C, E, and Beta Carotene. Vitamin premixes, which are used to enrich breakfast cereals and numerous other processed foods, also were affected by the conspiracy. "Today's case demonstrates again the Justice Department's resolve to prosecute and obtain significant sentences against foreign executives engaged in international cartel activities that increase prices paid by American consumers," said Joel I. Klein, Assistant Attorney General in charge of the Department's Antitrust Division. Dr. Brnnimann is the second former senior Hoffmann-La Roche executive to be charged in the government's continuing investigation of illegal collusive practices in

the international vitamins industry. On May 20, 1999, Hoffmann-La Roche pleaded guilty to the same conspiracy and was sentenced to pay a record $500 million criminal fine. On that same day, Dr. Kuno Sommer, former Director of Worldwide Marketing for Hoffman-La Roche's Vitamins and Fine Chemicals Division, also was charged with participating in the vitamin cartel and lying to Department investigators in 1997 in an attempt to cover-up the conspiracy. Dr. Sommer, also a Swiss citizen and resident, pleaded guilty to the charges and was sentenced on July 23, 1999 to a four-month prison term and fined $100,000. According to the charge, Dr. Brnnimann was the head of Hoffmann-La Roche's Vitamins and Fine Chemicals Division and a member of Hoffmann-La Roche's Executive Committee from January 1990 until at least May 1999. From the Spring of 1991 until February 1999, Dr. Brnnimann engaged with counterparts at BASF Aktiengesellschaft, Rhone-Poulenc SA, and other unnamed co-conspirators in: agreeing to fix and raise prices on Vitamins A, B2, B5, C, E, Beta Carotene, and vitamin premixes; agreeing to allocate the volume of sales and market shares of such vitamins; agreeing to divide contracts to supply vitamin premixes to customers in the U.S. by rigging the bids for those contracts; and, participating in meetings and conversations to monitor and enforce adherence to the agreed-upon prices and market shares.

"Dr. Brnnimann knew of, approved, and participated in key aspects of Hoffman-La Roche's operation in the vitamins cartel," said Gary R. Spratling, the Antitrust Division's Deputy Assistant Attorney General for criminal enforcement. "As a member of Hoffmann-La Roche's Executive Committee at the time of his involvement, Dr. Brnnimann put the full weight of legitimacy behind the company's involvement in the most pervasive international cartel ever uncovered." Today's case is the 10th prosecution resulting from the ongoing investigation of the worldwide vitamin industry and the third prosecution of a foreign national. Dr. Brnnimann is charged with violating Section One of the Sherman Act, which carries a maximum penalty of three years imprisonment and a $350,000 fine for individuals. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The investigation is being conducted by the Antitrust Division's Dallas Field Office and the Federal Bureau of Investigation in Dallas.

2) Daiwa Bank Ltd. Type of Crime: Financial Criminal Fine: $340 million 10 Corporate Crime Reporter 9(3), March 4, 1996

Daiwa Exec Pleads Guilty in Trading Case

Banking: Former general manager of New York branch implicates several top bank managers in courtroom confession.
April 05, 1996|From Associated Press

NEW YORK A former general manager of Daiwa Bank's New York branch pleaded guilty Thursday to aiding a cover-up, disposing of the only outstanding charges arising from the $1.1-billion bond-trading scandal. Masahiro Tsuda was one of two bank employees charged in the extraordinary cover-up that was disclosed last summer by the Japanese bank. The central figure in the scandal was Daiwa bond trader Toshihide Iguchi. But the plea agreement between Tsuda and U.S. prosecutors raised the possibility of further federal action. The scandal already has forced Daiwa Bank Ltd. to shut its U.S. operations and pay the largest criminal fine ever levied against a financial institution in the United States. Tsuda agreed to cooperate with prosecutors in a continuing investigation into the bank's New York office, and he implicated several top bank managers in his courtroom confession to U.S. District Judge Sidney Stein. Tsuda, 54, wearing a dark blue suit and speaking slowly in a firm voice, put the blame squarely on his superiors in Japan, contending that they repeatedly advised him to fabricate records and not to immediately report the losses. "In Japan, I believe it is customary for a bank to wait until completing an internal investigation before reporting an employee's wrongdoing to the appropriate authorities," he told Stein in the lower Manhattan courtroom. "However, I knew that in the United States such reports should be made more swiftly and that an internal investigation was not a justification for not reporting in a timely fashion." Tsuda, who until Thursday had adamantly maintained his innocence, continued to be portrayed by his lawyer as a victim of international forces. That would include a warning against disclosing the cover-up by the Japanese Ministry of Finance. "This is a case in which extraordinary international, political and economic pressures have swallowed up one loyal employee stationed in his company's outpost," said Tsuda's attorney, Stanley Arkin. Tsuda remains free on bail awaiting sentencing July 12. He faces up to five years in prison and as much as $250,000 in fines. Tsuda's subordinate, Iguchi, pleaded guilty last fall to doctoring bank records and embezzlement in a scheme to hide $1.1 billion in trading losses he accumulated over 12 years.

Daiwa Bank pleaded guilty in February and agreed to pay $340 million in fines. In an earlier punishment by U.S. banking regulators, it halted operations in this country on Feb. 2. In his courtroom confession, Tsuda detailed a conspiracy involving the highest echelons of Daiwa management. Among the things he said he discussed with Daiwa managing director Hiroyuki Yamaji, Tsuda's superior, and Fumio Kitora, a Daiwa Trust executive, were various strategies for concealing Iguchi's losses.