Biovail Corp. has agreed to pay a $5 million fine plus costs of $1.5 million to settle allegations of improper accounting, misleading the public and making false statements to the Ontario Securities Commission.

Under the settlement, approved Friday by a panel of OSC commissioners, Biovail acknowledged that it misled the public in its financial filings.

The Mississauga-based pharmaceutical company also admitted making false statements to the OSC during the investigation.

Under the original statement of allegations issued last March, the OSC accused the company of failing to meet U.S. and Canadian accounting standards with its financial statements in 2001, 2002 and 2003.

Many of the infractions involved a “special purpose entity” called Pharmaceutical Technologies Corp., which the OSC contended was set up to take on $125 million worth of research-and-development expenses that would have otherwise been on Biovail’s books.

Also named in the same allegations, dated March 24, 2008, were four men who were Biovail senior executives.

The most prominent individual named in the allegations was Eugene Melnyk, Biovail’s founder, largest shareholder and former chairman,

Friday’s settlement is between the company and the regulator, and doesn’t cover the four individuals. The OSC is continuing its case against. A hearing begins Feb 2.

IE