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Issues To Consider From The Zimmer Biomet Enforcement Action

Issues

This previous post went in-depth into the $30.4 million Foreign Corrupt Practices Act enforcement action against Zimmer Biomet announced on January 12th.

This post highlights additional issues to consider.

Repeat Offender

Biomet is not the first company to be a repeat FCPA criminal offender, just the latest. Other criminal examples include Aibel Group / Vetco entities and Marubeni (and there several other examples involving SEC civil violations such as Orthofix Int’l recently becoming a repeat FCPA offender). To learn more about these examples, see the article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement.”

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Biomet Becomes An FCPA Repeat Offender

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For many years, the DOJ has advanced the policy position that DPAs and NPAs “have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe.” (See here for the prior post). Specifically in the Foreign Corrupt Practices Act context, the DOJ has stated that “the companies against which DPAs and NPAs have been brought have often undergone dramatic changes.”  (See here for the prior post).

As highlighted here, in March 2012 Biomet resolved an FCPA enforcement action involving alleged conduct in Brazil, Argentina, and China by agreeing to pay approximately $22.8 million ($17.3 million via a DOJ deferred prosecution agreement, and $5.5 million via a settled SEC civil complaint).

Since then, FCPA Professor has chronicled (herehere and here) how Biomet’s DPA was extended, how the DOJ ultimately came to conclude that Biomet had breached its DPA based on subsequent improper conduct, and how an additional FCPA enforcement was expected.

Last week, the DOJ and SEC announced (here and here) the additional FCPA enforcement action against Zimmer Biomet Holdings (in 2015 Zimmer Holdings acquired Biomet) and Biomet. As highlighted below, a portion of the improper conduct involved the same distributor in Brazil that gave rise to the 2012 FCPA enforcement action.

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Friday Roundup

Roundup

Guilty plea, scrutiny alerts and updates, SEC Director of Enforcement to leave, sound analysis of the JPMorgan enforcement action, and for the reading stack.

It’s all here in the Friday roundup.

Mebiame Guilty Plea

As highlighted in this previous post, in August 2016 the DOJ unsealed a criminal complaint charging Samuel Mebiame, a Gabonese national connected to Och-Ziff, with conspiracy to violate the FCPA’s anti-bribery provisions. In pertinent part, the complaint alleged that Mebiame, on behalf of Och-Ziff and related entities, routinely paid bribes to foreign government officials in at least each Niger, Guinea and Chad.”

Today, the DOJ announced that Mebiame pleaded guilty.

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Friday Roundup

Roundup

As we say not as we do, scrutiny alerts and updates, and further RIP to the “Arthur Andersen effect.” It’s all here in 200th edition of the Friday roundup.

As We Say, Not As We Do

This previous post highlighted the April Fools’ Day 2015 SEC enforcement action against KBR for its non-existent, theoretical muzzling of individuals in certain employment agreements. According to the SEC, this violated SEC Rule 21F-17, which provides in relevant part: (a) No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.”

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DOJ Determines That Biomet Has Breached Its Prior FCPA DPA

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The article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement” chronicles the DOJ’s use of alternative resolution vehicles to resolve alleged instances of FCPA violations by business organizations.

In doing so, the article highlights how the DOJ has gone beyond justifying its extensive use of NPAs and DPAs to championing their use to resolve alleged instances of corporate crime. Who can forget former DOJ Assistant Attorney General Lanny Breuer’s assertion that such agreements “have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe.”

Breuer further stated: “The result has been, unequivocally, far greater accountability for corporate wrongdoing — and a sea change in corporate compliance efforts.”

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