U.S. arm of UK medical-device company settles foreign corruption allegations over doctor payments
Tue, 7 Feb 2012 11:23 GMT
Tennessee-based medical device company Smith & Nephew Inc. has agreed to pay more than $22 million to settle allegations it violated the Foreign Corrupt Practices Act (FCPA) by making improper payments to publicly-employed Greek physicians and falsely recording the payments in its books and records.
Smith & Nephew Inc., the U.S. subsidiary of the UK's Smith & Nephew PLC, entered into a deferred prosecution agreement with the Justice Department and reached a settlement with the Securities and Exchange Commission (SEC).
According to court documents filed in U.S. District Court in the District of Columbia, Smith & Nephew executives, employees and affiliates agreed to sell products at full price to a Greek distributor and then pay a certain "discount" percentage to shell companies in the UK and the Isle of Man that were controlled by the distributor.
These off-the-books funds were reportedly used by the distributor to pay "cash incentives" to publicly employed Greek physicians to induce them to buy Smith & Nephew products. Between 1998 and 2008, Smith & Nephew employees and affiliates authorized the payment of nearly $10 million to the distributor's shell companies, some, it not all of which was passed on to physicians, court documents state.
In addition to paying the Justice Department nearly $17 million and cooperating with its ongoing investigation, Smith & Nephew agreed to implement rigorous internal controls and retain a compliance monitor for 18 months. The company also agreed to disgorge more than $5 million in pre-judgment interest to the SEC.
Greece has a national healthcare system wherein most hospitals are publicly owned and operated and the physicians who work at these facilities are government employees. According to the Justice Department's interpretation of the FCPA, anyone employed by a foreign government falls under the extraterritorial statute's definition of "foreign official" and cannot be bribed.
The U.S. business community has decried this interpretation of the term "foreign official" as overly broad and is lobbying Congress to amend the law to narrow it.
The investigation conducted by the Justice Department and SEC was aided by Greek law enforcement authorities.
Leave a comment:
IMPORTANT: Your comment will not appear immediately as we vet all messages before publication. We don't publish comments that are racist or otherwise offensive. Nor do we publish comments that advertise products or services. Please keep your comment concise and do not write in capitals.
Post a Comment
Post a Comment