This excerpt taken from the NVS 6-K filed Feb 8, 2008.
Ensuring effective implementation of our integrity standards is essential to sustain responsible business conduct. In all country organizations, processes are in place to manage certain risk areas and ensure that potential conflicts of interest as well as promotional activities are in line with Novartis standards and applicable laws.
Each year, Novartis managers confirm their understanding and adherence to the Code of Conduct and business-conduct standards. In 2007, confirmation was received from more than 27 000 Novartis managers. To evaluate implementation of our Integrity and Compliance Program, we developed a web-based monitoring tool that has been completed by 129 organizational units.
The Executive Committee of Novartis as well as local management teams worldwide are regularly updated about program activities, including training activities and cases of misconduct. This information is compiled into an annual report submitted to the Audit and Compliance Committee of the Board of Directors. Along with key achievements and challenges, this report addresses the implementation and effectiveness of our Integrity and Compliance Program.
There are occasions when our internal standards are disregarded and, as a result, our associates, our customers, our business and our reputation may suffer. Novartis associates are obliged to report actual or suspected incidents under a policy that guarantees non-retaliation and protection of identity when a person makes a report and during any subsequent action.
In 2005, the Business Practices Office (BPO), was created to consolidate responsibility for receiving reports and determining appropriate responses to the information received. All complaints are investigated and substantiated cases are referred to senior management for appropriate disciplinary action. To help associates report allegations of misconduct, Integrity Telephone Lines have been introduced in 70 countries, providing the option of reporting allegations in 51 languages. Confidential messages can be left for the BPO which endeavors to respond within 72 hours.
The BPO report for 2007 underscores the impact of that improved reporting infrastructure. The addition of permanent staff in Europe and North America has also enhanced the capability of the BPO to handle complaints from both Novartis associates and third parties.
During 2007, the BPO received 906 complaints. To date, 436 of the complaints reported last year have been fully investigated and 290 complaints fully or partly substantiated. Employment contracts of 168 associates were discontinued last year while 92 warning letters were issued and appropriate training undertaken to improve behavior.
Working with the Corporate Integrity and Compliance Department, the BPO conducts systematic reviews of relevant cases to ensure training programs address relevant trends and forms of misconduct identified by complaint investigations. Despite a rise in terminations last year, the rate of 9.0 reports of alleged misconduct per 1 000 associates at Novartis has increased as the program becomes embedded and compares favorably with benchmarks for the retail and financial-services industries, which receive, respectively, 12 and 14.5 misconduct reports per 1 000 employees.
The commitment to ethical business conduct at Novartis is enhanced as the BPO builds support among associates by conducting centralized, consistent and confidential investigations of complaints. In one example last year, a junior financial clerk in a European country alerted the BPO to the alleged failure of a manager to follow correct financial-reporting processes. The clerk was threatened with termination by the manager due to the report but
the BPOs investigation substantiated the complaint, corrected the financial reporting process, and the manager was terminated as a consequence of the threats directed against the junior employee.