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1) F. Hoffmann-La Roche Ltd.Type of Crime: AntitrustCriminal Fine: $500 million12 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


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the international vitamins industry. On May 20, 1999, Hoffmann-La Roche pleadedguilty to the same conspiracy and was sentenced to pay a record $500 millioncriminal fine. On that same day, Dr. Kuno Sommer, former Director of WorldwideMarketing for Hoffman-La Roche's Vitamins and Fine Chemicals Division, also wascharged with participating in the vitamin cartel and lying to Department investigatorsin 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 afour-month prison term and fined $100,000.

According to the charge, Dr. Brnnimann was the head of Hoffmann-La Roche'sVitamins and Fine Chemicals Division and a member of Hoffmann-La Roche'sExecutive Committee from January 1990 until at least May 1999. From the Spring of1991 until February 1999, Dr. Brnnimann engaged with counterparts at BASFAktiengesellschaft, 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-LaRoche's operation in the vitamins cartel," said Gary R. Spratling, the AntitrustDivision's Deputy Assistant Attorney General for criminal enforcement. "As a memberof 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 inthe 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 carriesa 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 losssuffered by the victims of the crime, if either of those amounts is greater than thestatutory maximum fine.

The investigation is being conducted by the Antitrust Division's Dallas Field Officeand the Federal Bureau of Investigation in Dallas.

2) Daiwa Bank Ltd.Type of Crime: FinancialCriminal Fine: $340 million10 Corporate Crime Reporter 9(3), March 4, 1996

Daiwa Exec Pleads Guilty in Trading Case


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Banking: Former general manager of New York branch implicatesseveral 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.
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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.

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