Biomet Becomes An FCPA Repeat Offender
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 (here, here 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.
Company Under FCPA Scrutiny Since 2012 Discloses Additional FCPA Scrutiny And Delays Filing Its Financial Results
There are two ways to react to the above headline.
The first is that MTS Systems is a corrupt business organization because “good companies don’t bribe period.”
The second is along the lines of what DOJ Assistant Attorney General Leslie Caldwell recently stated.
“We recognize that any big company can’t control all of its employees all of the time, we recognize that. If you are a company operating in certain geographies you are going to be paying possibly small, but you will be paying some kind of inappropriate payment, we recognize that. We recognize that companies have rogue employees who don’t follow company policy so even when there is a strong company policy it may still be the case that somebody in the company does something that is off the reservation, that happens all the time … it’s impossible for a big global company to make sure that all of its employees are following the law all of the time” (See here for the video clip).
Orthofix International Poised To Join The FCPA “Repeat Offender” Club
The recent article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement” highlights that part of the DOJ’s rhetoric surrounding such alternative resolution vehicles is that such agreements “have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe” and that “the result has been, unequivocally, far greater accountability for corporate wrongdoing — and a sea change in corporate compliance efforts.”
However, as highlighted in the article the DOJ’s policy justification for NPAs and DPAs rings hollow as there is no data to suggest that resolving alleged instances of corporate criminal liability through NPAs or DPAs achieves any meaningful deterrence.
As further highlighted in the article through reference to specific companies, despite the DOJ’s statement that companies resolving enforcement actions through NPAs or DPAs have “undergone dramatic changes,” several companies that resolved FCPA enforcement actions through alternative resolution vehicles have subsequently resolved additional FCPA enforcement actions or become the subject of additional FCPA scrutiny.
Recent posts here and here have chronicled how Biomet (a company that resolved a prior FCPA enforcement via a DPA) is soon to join the inauspicious “FCPA Repeat Offender” club and this post highlights how Orthofix International (another company that resolved a prior FCPA enforcement action via a DPA) is also poised to join the club.
Friday Roundup
Scrutiny alerts and updates, sentenced, asset recovery, to FCPA Inc., across the pond, quotable and for the reading stack.
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Scrutiny Alerts and Updates
Grupo Televisa
This Wall Street Journal article concerns Grupo Televisa SAB, a Mexican broadcaster with shares traded on the NYSE. According to the article:
DOJ Determines That Biomet Has Breached Its Prior FCPA DPA
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.”