Monthly Archive for December, 2009

Robert Dougal: De Puy executive charged with Greek healthcare bribes

Published on 09/12/2009. Closed Tags: , , .

The SFO reports that it has charged Robert Dougal, a former Vice President of Market Development of DePuy International Limited.  DePuy are a part of Johnson & Johnson (it was acquired in 1998) which has already been (partway?) through the mill in the US. 

It will be recalled that in September 2007, leading manufacturers of orthopedic implants: Biomet, Stryker, Zimmer, Smith & Nephew, and Depuy settled with the DOJ and SEC (paying penalties of $310 million) and accepted that they had paid bribes and kickbacks to US doctors who had bought their products.

In all, according to statements from the five companies, more than $200 million was been paid to doctors, clinics and university health systems across the country in 2007.  The companies admitted to no wrongdoing: they said that fees and royalties were paid to doctors who helped invent and conduct clinical trials on experimental products; others were payments for those experts who advise the manufacturers or teach others how to implant the devices, or were reimbursements for “reasonable costs.”
But the domestic US investigations were just the tip of an iceberg, and we understand that investigations continued into payments to doctors in other jurisdictions, including  Greece, Poland and Germany.

This UK summons alleges that Dougal conspired to make corrupt payments and /or gave inducements to medical professionals working in the Greek public healthcare system in relation to the supply of orthopaedic products between February 2002 and December 2005.  The case was committed to the Crown Court until 3 February 2010.

It is likely that we will have more to report about this sector soon.

A copy of the (very short) SFO press release is found here  .  The Times 2007 article is here.

Pharmaceutical companies in the spotlight

Published on 04/12/2009. 0 Comments Tags: , , .

On 12 November  2009, Lanny  Breuer, Assistant Attorney General in the Criminal Division of the DoJ, gave a speech to the Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum.  Mr. Breuer made it abundantly clear that the DoJ intends to enforce the FCPA vigorously in the pharma and medical device sectors.  He seemed to come very close to asserting that FCPA violations are virtually inevitable, stating that:

“The depth of government involvement in foreign health systems, combined with fierce industry competition and the closed nature of many public formularies, creates a significant risk that corrupt payments will infect the process. The Criminal Division stands ready to ferret out this illegal conduct and we are uniquely situated to do so.”

It is widely known that the DoJ is currently pursuing a number of medical device cases (Biomet Inc, Stryker Corp, Zimmer Holdings Inc, Smith & Nephew plc and Medtronic Inc). The DoJ is also pursuing  a number of pharma companies that won orders under the Oil-for-Food Program (Novo Nordisk and Akzo Nobel have both settled, while a number of investigations are ongoing, for example the investigation of Glaxo Smith Kline). 

Another case of considerable interest is the Schering-Plough case which related to charitable contributions made via their Polish operations.  The Polish foundation which received the payments had a founder/president who was also the director of a government health fund which provided money to hospitals throughout Poland for the purchase of pharmaceutical products.  The donations were allegedly falsely recorded as being in respect of “disease prevention”.

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The Bribery Bill – what does it mean for UK plc?

Published on 01/12/2009. Closed Tags: , .

There has been much comment following the inclusion of the Bribery Bill into the Queen’s Speech in mid November. Whilst the House of Commons’ reply on the Bill is awaited, with its broad, cross-party support, there are few impediments to the Bill becoming law before the next general election.

The Bill is part of a push by UK authorities to finally act to stop commercial bribery. It applies to UK companies and foreign companies doing business in the UK, as well as UK nationals and those with a connection to the UK. It criminalises the paying and receiving of bribes anywhere in the world, however small, in both the public and private sectors. Controversially, it introduces a new corporate offence of failing to prevent bribery being undertaken on its behalf.

Whilst not having a direct effect on the activities of all fiscal planners, the new laws will certainly have direct application to all multinationals and UK businesses trading overseas. In our experience, it is during interactions with foreign tax officials (both direct and indirect tax authorities) that many bribes take place.

It takes many months to get the necessary compliance systems in place and bedded down, and penalties for failure are severe. The Serious Fraud Office, the Financial Services Authority, and the City of London police are already investigating and prosecuting bribery cases, and it is therefore vital that business managers and professional advisors fully understand the implications of the Bribery Bill now, to ensure that the necessary control structures are in place and tested well before the date of implementation.

Here we give a non-legal introduction to the proposed new compliance regime from the perspective of a forensic accountant experienced in compliance matters. It describes the two business areas where UK companies are most at risk and sets out the steps that corporates need to be aware of as they prepare for the new law.

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