Investigation has uncovered incriminating evidence against CEO, suggests WSJ report
Rhode Island attorney Peter Neronha has alleged that Google’s co-founder and chief executive Larry Page was aware that the advertisements for illegal Canadian drugs were running on its US website.
Last week, the search engine company agreed to pay the Department of Justice (DOJ) $500m to settle the case over its role in allowing online Canadian pharmacies to place advertisements through its AdWords program without verification.
The settlement is one of the largest sums paid by a company to the DOJ.
Now, Neronha, who led a probe into the advertisement and sale of illegal medicines in the US, has revealed that emails have been found during the investigation that incriminated Page over the advert scandal.
"Larry Page knew what was going on," he told the Wall Street Journal.
However, Neronha declined to provide further details about Page’s involvement as both sides have signed a non-prosecution agreement as part of the settlement.
However, the agreement mentions that "an employee of the company’s policy group" knew about the advertisements and sale of illegal drugs in the US.
Under ‘Statement of Relevant Facts’ in the agreement, it is written: "As early as 2003, the company [Google] was aware that in most circumstances it was illegal for pharmacies to ship controlled and non-controlled prescription drugs into the United States from Canada. For example, in March 2003 and again in December 2008, the national Association of Pharmacy advised the Company that the importation of prescription drugs from foreign countries is illegal."
The agreement also states: "The Company was aware that importation of prescription drugs to consumers in the United States is almost always unlawful because the United States Food and Drug Administration ("FDA") cannot ensure the safety and effectiveness of foreign prescription drugs that are not FDA-approved…"
It adds that "As early as 2003, the Company was on notice that online Canadian pharmacies were advertising prescription drugs to the Company’s users in the United States through the Company’s AdWords advertising program. Although the Company took steps to block pharmacies in countries other than Canada from advertising in the United Sates through AdWords, the Company continued to allow Canadian pharmacy advertisers to geo-target the United States in their AdWords advertising campaigns."
"The Company knew that U.S. Consumers were making online purchases of prescription drugs from these Canadian online pharmacies. For example, in a November 18, 2003 email, a Company employee discussed the advertising budgets of several Canadian online pharmacy advertisers and noted that ‘[a]ll ship from Canada into the US via Express mail.’ In an August 23, 2005 email, an employee in the Company’s policy group stated, ‘the majority of Canadian Pharmacies are in business to drive pharmacy traffic from the United States to Canada’ and ‘target the US in their geo-targeting.’"
Google has not commented on Neronha’s accusations. Instead it maintained that the company should not have allowed "those ads on Google."
Google is believed to have violated its own advertising policies and allowing illegal drugs to enter the US.
Google had it mandatory for online companies to get their ads vetted by verification firms. However, it has come to light that the practice was stopped in early 2010.
In February this year, Google announced that it would no longer allow Canadian pharmacies to advertise to US customers.
"We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago. However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place," the company had said.
The AdWords program is a big source of revenue for Google, earning the company around $28bn in 2010.
After last week’s settlement, the DOJ said that the fine of $500m comprises both what Google made from the illegal advertising and the revenue the Canadian companies made from their sales to US consumers.
In May this year, Google revealed that it had adjusted its revenue by keeping $500m for the DOJ probe.
Google had said in a filing with the the Securities and Exchange Commission (SEC), "In May 2011, in connection with a potential resolution of an investigation by the United States Department of Justice into the use of Google advertising by certain advertisers, we accrued $500 million for the three month period ended March 31, 2011."