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Random Musings

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This post contains random musings regarding the continued media scrutiny of potential Foreign Corrupt Practices Act repeat offenders General Electric, Siemens, and Philips (see here and here for prior posts).

In yet another story, this recent New York Times article goes in-depth into alleged corruption in the Chinese healthcare sector.

The article begins:

“A trip to the sauna. A golf club membership. Luxury watches. Neatly packed bricks of red Chinese bills worth $220,000. The bribes lined the pockets of health care officials across China. Their purpose: to get public hospitals to buy millions of dollars’ worth of sophisticated medical equipment made by foreign companies like General Electric, Siemens, Philips and Toshiba. A review of dozens of Chinese court cases and internal corporate documents as well as interviews with company insiders showed how foreign firms have become deeply enmeshed in the corruption pervading China’s health care industry. The New York Times reviewed more than a dozen cases in which employees of G.E., Philips and Siemens testified to bribing meagerly paid public hospital officials. In many other cases, Western companies signed off on deals involving third-party contractors who paid bribes and sought kickbacks. Sometimes, the companies continued to sign off on deals involving contractors who admitted to bribery in court.”

As stated in the article:

“Siemens, G.E., Philips and others say hospitals often force them to sell through a series of middlemen, where much of the bribery takes place. […] Siemens, Philips, Toshiba and G.E. said that Chinese law required hospitals to hire third-party companies to import foreign equipment and that they had no say in who was involved.”

The following is not meant in any way to rationalize or condone any improper conduct, but rather to understand the real world business conditions which often give rise to FCPA scrutiny. In other words, as highlighted numerous times on these pages, the root cause of many FCPA enforcement actions are foreign trade barriers and distortions.

For instance, if there was no Chinese law that required hospitals to hire third-party companies to import foreign medical equipment – and companies could sell such equipment direct to hospitals – perhaps bribery and corruption could be reduced.

Another random thought is the following.

As highlighted in this previous post and others, from the beginning of the 2016 battle over the Siemens’ monitor reports (see here for the prior post), I’ve long had my own suspicion as to why the DOJ and Siemens are actively seeking to block release of the Monitor reports and it has nothing to do with the issues discussed in the briefs by the DOJ and Siemens. It has to do with issues highlighted in the New York Times report and other media reporting.

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