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Foreign Corrupt Practices Act & Anti-Corruption

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  • Colombia, Greece Charge Dozens Tied to Various Bribe Schemes

    The continued escalation of foreign enforcement of bribe-makers and bribe-takers continued, with mass arrests or indictments in Colombia and Greece related to offerors and recipients of bribes at issue in several FCPA enforcement actions. In Colombia, according to the Wall St. Journal, prosecutors recently charged six current or former employees of Ecopetrol SA, a majority state-owned oil company, with accepting bribes from employees of PetroTiger.  PetroTiger’s former Chief Executive Officer is scheduled to stand trial in April in a New Jersey federal court on charges of funneling money to one of the Ecopetrol employees arrested, including through consulting contracts with the employee’s wife, in exchange for contracts.  Two other former PetroTiger executives have already pleaded guilty in the case (see prior FCPA Scorecard coverage). In Greece, also according to the Wall St. Journal, authorities recently indicted 64 people related to bribery in the Siemens AG cases.  Both alleged offerors of bribes at Siemens, and alleged recipients of bribes at a Greek telephone company, were charged.  As previously detailed, eight former Siemens executives were indicted in the U.S. in 2011 related to allegations of bribery in Argentina.  Siemens itself reached a record $800 million resolution in 2008 with the DOJ and SEC related to violations in numerous countries including Greece.

    Siemens AG Greece PetroTiger Colombia

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  • Smith & Nephew Resolves US FCPA Enforcement Actions for $22.2 Million

    Anti-corruption enforcement initiative involving medical device manufacturers continues, as Smith & Nephew resolves US FCPA enforcement actions for $22 million.

    On February 6, 2012, the U.S. Department of Justice and Securities and Exchange Commission announced resolved FCPA enforcement actions against medical device manufacturer, Smith & Nephew Inc., and its UK-based parent company, Smith & Nephew plc.  The combined monetary sanction totals $22.226 million, and the UK parent must retain an independent compliance monitor for a period of 18 months. The conduct in question, as alleged in the SEC Complaint, involved the use of three UK shell companies created by a distributor in Greece for use as conduits to make payments to physicians in Greece working "at publicly-owned hospitals [and who were] government employees, providing healthcare services in their official capacities."  The commercial relationship between Smith & Nephew and the distributor ended in 2008. Notable points: Compliance Monitor:  The settlement requires Smith & Nephew to retain an "independent compliance monitor" for a period of 18 months, in contrast to the many recent FCPA cases that have been resolved with the retention of a "compliance consultant."  Although the DOJ Press Release noted the company's "cooperation with the department's investigation, thorough self-investigation of the underlying conduct, and the remedial efforts and compliance improvements undertaken by the company," the resolution still involves a monitor. Distributor: The vast majority of FCPA matters involve a third party in some manner and in this case, the third party was a distributor.  Although a few prior FCPA cases have involved distributors (see e.g., InVision in 2005), most involve a different type of commercial relationship, such as agents or consultants.  Many companies classify distributors as a type of customer rather than as an intermediary, and in doing so apply compliance controls that may not be as robust as for agents or consultants.  As this case confirms, distributor relationships may present acute corruption risks, and should be assessed and controlled for such risks. International Cooperation / Greece: In April 2011, medical device manufacturer DePuy International, a subsidiary of Johnson & Johnson, pleaded guilty to violating the FCPA for conduct related to sales to state-employed physicians in Greece.  In both the DePuy and Smith & Nephew cases, the DOJ "acknowledge[d] and expresse[d] its appreciation for the assistance provided by the authorities of the 8th Ordinary Interrogation Department of the Athens Court of First Instance and the Athens Economic Crime Squad in Greece."  This ongoing cooperation is consistent with the long term trend of international collaboration on anti-corruption matters. Industry-Wide Enforcement: As described in the SEC press release, "[t]he charges stem from the SEC's and DOJ's ongoing proactive global investigation of bribery of publicly-employed physicians by medical device companies."  Prior enforcement actions have been lodged against device manufacturers AGA Medical Corp. (regarding conduct in China), Immucor Inc. (Italy) and Micrus Corp. (France, Turkey, Spain and Germany), and this action seems certain not to be the last. Smith & Nephew issued its own press release regarding the enforcement actions.

    Smith & Nephew Johnson & Johnson DePuy International Greece AGA Medical Corp. Immucor Inc. Micrus Corp.

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