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The FCPA Repeat Offender List May Substantially Grow

Previous posts here [1] and here [2] have highlighted the numerous companies which have resolved not just one, but two, Foreign Corrupt Practices Act enforcement actions.

The FCPA repeat offender list may substantially grow as Reuters reports [3] that “the U.S. FBI is investigating corporate giants Johnson & Johnson, Siemens AG, General Electric Co and Philips for allegedly paying kickbacks as part of a scheme involving medical equipment sales in Brazil.”

According to the Reuters article:

“Brazilian prosecutors suspect the companies channeled illegal payoffs to government officials to secure contracts with public health programs across the South American country over the past two decades.

[…]

Brazilian federal prosecutor Marisa Ferrari confirmed in an interview with Reuters that U.S. authorities from the Justice Department and the Securities and Exchange Commission were assisting in the Brazilian medical equipment investigation she helps lead.

[…]

“We are constantly sharing information with the FBI on this (medical equipment) case. They ask for documents and we send them, and they are assisting our investigation in return,” Ferrari said. In addition, she said, “We’ve received a lot of material from the Department of Justice and from the SEC.”

As highlighted below, Johnson & Johnson, Siemens, General Electric and Philips have all previously resolved FCPA enforcement actions.

Johnson & Johnson

As highlighted here [4], in 2011 the company agreed to pay approximately $70 million to resolve parallel DOJ and SEC FCPA enforcement actions focused on business conduct in Greece, Poland, and Romania. The enforcement actions also resolved an investigation of Johnson & Johnson subsidiary companies in the United Nations Oil for Food Program in Iraq. In resolving the matter, the company agreed to a court order permanently enjoining it from future violations of the FCPA’s anti-bribery, books and records and internal controls provisions.

[5]

Siemens

As highlighted here [6] and here [7], in 2008 Siemens agreed to pay $800 million in combined fines and penalties to settle DOJ and SEC FCPA enforcement actions for a pattern of bribery the DOJ called “unprecedented in scale and geographic scope.” At the time, and for a long time, the settlement amount was the largest ever under the FCPA and is currently number two on the list [8] of largest FCPA settlements. In resolving the matter, the company agreed to a court order permanently enjoining it from future violations of the FCPA’s anti-bribery, books and records, and internal controls provisions.

General Electric

As highlighted here [9], in 2010 the company resolved a $23.4 million SEC FCPA enforcement action based on findings  that “two GE subsidiaries – along with two other subsidiaries of public companies that have seen been acquired by GE – made illegal kickback payments in the form of cash, computer equipment, medical supplies, and services to the Iraqi Health Ministry or the Iraqi Oil Ministry in order to obtain valuable contracts under the U.N. Oil for Food Program.” In resolving the matter, the company agreed to a court order permanently enjoining it from future violations of the FCPA’s books and records and internal controls provisions.

As highlighted here [10], in 1992 General Electric resolved a $9.5 million DOJ FCPA enforcement action concerning conduct in Israel.

Philips

As highlighted here [11], in 2013 the company resolved a $4.5 million SEC FCPA enforcement action based on findings that its Polish subsidiary “made improper payments to public officials of Polish healthcare facilities to increase the likelihood that public tenders for the sale of medical equipment would be awarded” to the subsidiary. In resolving the matter, Philips was ordered to cease and desist from committing or causing any violations and any future violations of FCPA’s books and records and internal controls provisions.

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