Alibaba to pay US$600 million to resolve US drug sales probe

Chinese technology and e-commerce giant Alibaba (9988) and its US-based payment processor have agreed to pay US$600 million (HK$4.68 billion) to resolve allegations that they failed to prevent illegal drug sales, the US Justice Department said on Wednesday.

The companies entered into non-prosecution agreements to resolve allegations that they violated the US Federal Food, Drug, and Cosmetic Act by failing to prevent merchants from selling and importing illegal drugs, chemicals and pill presses into the United States through Alibaba's e-commerce platforms.

The Justice Department said Alibaba and its US-based payment processor, AUS Merchant Services, agreed as part of the deal to accept responsibility for the acts of their officers and employees and enhance their compliance programs.

"This settlement reflects a thorough regulatory process with Alibaba's full cooperation and our commitment to best-in-class standards of control, policies, and measures against non-compliant product sales," Alibaba said in a statement.

According to the Justice Department, Alibaba as part of the deal admitted that it failed from 2016 to 2024 to prevent about 80,000 product sales of chemicals, drugs and pharmaceutical counterfeiting equipment that were imported from overseas.

Those transactions had a combined merchandise value of more than US$200 million, according to the Justice Department. Law enforcement during the probe conducted more than 40 undercover purchases of illegal pharmaceuticals and counterfeiting equipment, it said.

At times, Alibaba employees raised concerns about whether illegal products were being sold and whether the company's compliance measures were inadequate to prevent such sales from occurring, the department said.

The US government said the US-based payment processor's anti-money laundering compliance program failed to prevent some merchants from using its services to facilitate the sale and importation of prohibited products.

"Today's resolution reflects the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign pharmaceuticals off their marketplaces," Assistant US Attorney General Brett Shumate said in a statement.

Reuters

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