Novartis AG has agreed to pay a $25 million settlement with the U.S. Securities and Exchange Commission over accounting and bookkeeping issues relating to illicit payments made in China.

An SEC probe had found that employees of two China-based Novartis subsidiaries provided gifts, money and other valuables to state health care professionals. The SEC said the gifts led to several million dollars in sales of pharmaceutical products to state health institutions in China. Among the gifts, according to the SEC, was travel for the health care professionals and their spouses to a conference in Chicago.

Gifts also included spending money during the trip and covering strip-club charges, according to the SEC. Investigators said Novartis was negligent in developing and maintaining a system of internal controls and did not have an effective anti-corruption compliance program to detect the inappropriate charges. The SEC said the Chicago trip expenses were not reflected on Novartis’ books.

The payment schemes, which lasted for five years (2009-13), according to the SEC, involved complicit managers in those units.

The Securities Commission contends that Novartis violated the internal controls and books-and-records provisions of the Foreign Corrupt Practices Act.

Novartis did not admit guilt or deny the findings, but did agree to pay $21.5 million in disgorgement, a $2 million civil penalty, and $1.5 million in interest. The settlement also requires the company to provide the SEC with a status report on implementing an anti-corruption compliance measures.

A company spokesman told the Wall Street Journal that issues brought to light in the SEC case “largely pre-date many of the compliance measures introduced by Novartis” company-wide in recent years.

“We believe these measures, which we review and update on an ongoing basis, address the issues raised by the SEC and reflect a broader initiative by Novartis to align and enhance our compliance standards globally,” the spokesman said.

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