The U.S. Justice Department's stepped up enforcement in the pharmaceutical industry has struck "the fear of God" in executives, a top lawyer at GlaxoSmithKline said today, addressing whether prosecutors have gone too far in building cases rooted in business conduct.
The Glaxo lawyer, Elpidio Villarreal, vice-president of global litigation at the pharmaceutical company, said the rhetoric coming out of DOJ in the last couple of years concerns the ability and intent of the government to hold accountable an executive for the person's mere position in the company.
Executives, Villarreal said, speaking generally at a panel discussion sponsored by DRI—The Voice of the Defense Bar, are now living “in fear of losing everything" not for personal conduct but for what someone else may have done.
“It does seem to be imposing an astronomical burden on a well-meaning, well-intentioned, competent executive,” Villarreal said. GlaxoSmithKline, he said, has “spent a fortune” building and strengthening what he called a “robust” corporate compliance program.
The notion that an executive who does the right thing but still could end up getting charged will foster cynicism and create a sense of distrust, Villarreal said. Both feelings, he added, could undermine the government’s legitimate interest in corporate compliance.
Still, Villarreal said the increased government scrutiny is welcomed, calling the pharmaceutical industry “vastly improved” since ten years ago.
The panel’s moderator, Jonathan Rosen, a white-collar defense partner in the Washington office of Shook, Hardy & Bacon, described what he called a “highly aggressive” enforcement environment.
Rosen posed questions to the panel members to explore the extent to which the government is criminalizing good-faith business decisions.
Deborah Connor, chief of the fraud and public corruption section of the U.S. Attorney’s Office for the District of Columbia, said prosecutors take into account a corporation’s cooperation when it comes time to decide whether to bring charges.
“We decline to prosecute cases every day,” said Connor, the only current assistant U.S. attorney on the panel today. “We have that choice, and we make that choice all the time.”
Connor and others on the panel discussed the increased concern among judges and the public in general that more corporate executives are not being held accountable in criminal cases against the company. That issue has come up from time to time in Washington federal district court in settlements with financial companies.
Hogan Lovells partner Peter Spivack, co-leader of the firm’s investigations, fraud and white-collar practice, participated on the panel with Howard Sklamberg, director of the U.S. Food and Drug Administration’s enforcement office, and Stephen Gannon, deputy general counsel at Capital One Financial Corp.
Spivack and Villareal questioned the scope of new financial industry regulations that provide monetary incentives to whistleblowers who pursue misconduct allegations. Villareal said the best bet for a company employee may not be to assist in ferreting out wrongdoing, but instead to cash in. He questioned the merits of such a situation.