THE SWISS PHARMACEUTICAL giant F. Hoffman-LaRoche and Co. may be the subject of an investigation regarding its sedative Versed (generically, midazolam). The drug, which is administered intravenously to patients undergoing brief diagnostic procedures, has been responsible for 40 deaths since its introduction in this country two years ago. Congressman Ted Weiss, D-NY Chairman of the House Subcommittee on Human Resources and Intergovernmental Relations, has called on the Justice Department to investigate these deaths and the allegation that Hoffman-LaRoche and the Food and Drug Administration rushed to approve the drug despite clinical information about Versed-associated deaths in Europe. Dr. Sidney Wolfe, Director of the Public Citizen Health Research Group, charges that Versed was approved for use in dosages as much as two to four times greater than doses at which the drug is being marketed in Europe. He said that the excessive dosage allowance caused doctors to "unwittingly give their patients toxic doses of Versed resulting in fatal respiratory and/or cardiac depression."

THE FOREIGN CORRUPT Practices Act (FCPA) was designed and passed by Congress in 1977 to provide some measure of assurance that American-based multinationals could be held accountable for their conduct abroad. Its most important provision calls for criminal prosecution and establishes civil liability in cases where persons "knowingly or with reason to know" attempt to pay- off foreign officials in exchange for professional favors. Recent developments in Washington, however, suggest that FCPA's days as an effective means to influence corporate behavior abroad are numbered, and raise questions about just how vigorously the Act has been enforced since its passage. Corporations oppose FCPA and a well-oiled campaign to weaken it has apparently finally succeeded. The Washington-based Emergency Committee for American Trade, a business lobby representing 55 multinationals with global sales estimated at $650 billion, spearheaded the attack on the Act. In May, the group claimed victory as the House and Senate conferees agreed to a "reform" package. Their agreement significantly weakens the previously strict standards of criminal and civil liability for payoffs, and proposes to legalize overseas payments if they are "reasonable" and based on "local custom." The new wording of the Act, consumer groups and others have complained, will make future FCPA bribery convictions virtually impossible. Interestingly, the recently-departed chief of the Justice Department's Criminal Division, William Weld, strongly opposed the reform proposals, and has complained about "ideologues" at the Justice Department who blocked his attempts to maintain a strict FCPA.

Even before the reform effort, the FCPA had been criticized for being under-enforced. BBC reporter John Kelly, writing in the Boston Globe, said that a loophole in the 1977 legislation allows companies engaged overseas in matters of "national security" to circumvent FCPA's reporting requirements. It allows "the head of any federal department or agency responsible for national security matters" to release "any person acting in cooperation" with a federal agency from FCPA constraints. Though little is known about what companies have received "exempt" status, congressional and other investigators looking into allegations of illegal corporate payoffs have been blocked by CIA concerns about "national security." In one case, the late CIA director William Casey personally intervened to prevent congressional officials from looking into rumors of American oil company bribes in Saudi Arabia. In another case, a Securities & Exchange Commission (SEC) investigation of Page Airways, Inc. of Rochester, New York, over alleged payments in excess of $75 million to government officials of at least five foreign countries was closed. SEC documents state that "an agency of the United States" intervened, arguing that the case involved "matters of national interest."

THE U.S. BANKING INDUSTRY, already plagued by depressed agriculture and energy money markets, is currently facing the most serious fraud and embezzlement problem in its history. John Keeney, the acting Assistant Attorney General in charge of the Justice Department's Criminal Division, this month told the Senate Judiciary Committee that known losses from bank fraud and embezzlement rose from $382 million in 1984 to $841 million in 1985 to $1.1 billion in 1986. And the figures will only climb for 1987 and 1988.

Revelations about the severity of the insider abuse problem, and the key role it plays in many bank failures, are an acute embarrassment to banking executives, who prefer to cite troubled regional economies and other uncontrollable circumstances as the sources of their difficulties. But the mounting evidence being assembled as investigators study the current banking crisis across the southwestern states indicates that old-fashioned bad management coupled with criminal plundering are responsible for the overwhelming majority of failed operations. One such study, commissioned by the Comptroller of the Currency, looked at 185 national banks that failed between 1979 and 1987. It concluded that despite the greatly disproportionate failure rate in the southwest, widely attributed to oil and agriculture woes, depressed local economic conditions were a significant factor in only 35 percent of the cases reviewed. Weak management, on the other hand, was significant in 90 percent of failures, and fraud and insider abuse were major contributors in 48 percent of the failures.