A London-based medical device company, Smith & Nephew PLC, has settled an FCPA matter with DOJ and SEC involving bribes to public sector doctors in Greece by U.S. and German subsidiaries of Smith & Nephew. The allegations are that the company and its subsidiaries used a distributor to create a fund to make illicit payments to public doctors employed by government hospitals or agencies in Greece. On paper, it appeared as though Smith & Nephew’s subsidiaries (including Smith & Nephew Inc.) were paying for marketing services. However, no services were actually performed. The scheme, which began in 1997 and lasted for over a decade, generated off-shore funds that were not subject to Greek taxes and were used to make improper payments to the government doctors. Employees of Smith & Nephew were alleged to have failed to act on numerous red flags of bribery. For example, in one e-mail exchange between a sales manager and the company’s distributor concerning whether to reduce the distributor’s commissions, the distributor stated, “In case it is not clear to you, please understand that I am paying cash incentives right after each surgery . . . . “ Smith & Nephew Inc. nonetheless did not reduce the commissions. Smith & Nephew PLC agreed to settle the SEC’s charges by paying more than $5.4 million in disgorgement and prejudgment interest. Smith & Nephew Inc. agreed to pay a $16.8 million fine as part of a deferred prosecution agreement with the Department of Justice. See SEC Litig. Release 2012-32, SEC Charges Three Oil Services Executives With Bribing Customs Officials in Nigeria (Feb. 24, 2012).
Register Now As you are not an existing subscriber please register for your free daily legal newsfeed service.
RegisterIf you have any questions about the service please contact customerservices@lexology.com or call Lexology Customer Services on +44 20 7234 0606.
Smith & Nephew PLC settlement illustrates pitfalls of ignoring red flags
- Jenner & Block
- Iris E. Bennett
- Greece, United Kingdom, USA
- April 30 2012
-
Tags
If you are interested in submitting an article to Lexology, please contact Andrew Teague at ateague@lexology.com.
![]()
How Yee Loh
In-house Counsel
Kuok Group
