An Athens court has convicted former Johnson & Johnson executives in connection with a long-running investigation into allegations that the company bribed medical professionals to secure contracts in Greece.
Sitting as a first instance court, a three-member panel at the Court of Appeal in Athens found three former executives at Johnson & Johnson and its subsidiary DePuy guilty of fraud and money laundering on 29 July.
Prosecutors in Greece secured convictions against Johnson & Johnson’s former company group chairman Michael Dormer, former DePuy vice president for finance Gary Fitzpatrick, and former DePuy company secretary John Coppack as part of a probe launched in 2014 on the back of US and UK investigations into similar conduct.
The court also convicted Nikolaos Karagiannis, the owner of Greek medical distributor Medec which was acquired by DePuy in 2001, his former personal assistant Despina Filippou, two other Medec employees, an accountant at DePuy’s Greek branch, Panagiotis Papaspyrou, and five medical professionals caught up in the bribery scheme.
The sentences are expected to be finalised on 30 July.
The court acquitted six defendants, including DePuy’s former legal director, Nicola Gifford, Irene Kyriakides, a partner at Kyriakides Georgopoulos law firm in Athens, Petros Karagiannis, the son of Karagiannis, and DePuy’s former vice president Robert John Dougall. GIR understands that two doctors were acquitted of all charges while one defendant, a UK national, died during the trial.
The individuals were summoned to court in Greece in 2016 on money laundering, fraud and bribery charges.
Prosecutors alleged that employees of Johnson & Johnson and other medical device companies made corrupt payments to Greek healthcare professionals to secure contracts for the sale of orthopaedic products between 2000 and 2006. The bribery charges were based on allegations that a percentage of the sales was kicked back as bribes to orthopaedic surgeons who chose DePuy’s products. Employees at DePuy also allegedly committed fraud by overpricing products to make funds available to pay the kickbacks.
The case originally featured bribery charges against certain individuals, however these were dropped after recent changes to Greece’s penal code reclassified active bribery as a misdemeanour when it had previously been a felony.
None of the counsel for the individuals, nor the Greek Prosecutor’s Office, responded to GIR’s requests for comment.
Dougall was acquitted of fraud charges on double jeopardy grounds and of the money laundering charges on the evidence, having been convicted of bribery charges in connection to the same conduct in the UK in 2010.
The SFO played a significant role in securing the result by appearing at trial in November 2018 to give evidence in support of the UK’s public interest after being called as a witness by Dougall’s lawyers.
Prior to Monday’s convictions in Greece, Dougall had been the only individual convicted in the case.
He had pleaded guilty to participating in the Greek bribery scheme in the UK in 2010, and as part of a cooperating offender agreement under section 73 of the Serious Organised Crime and Police Act 2005 (SOCPA), promised to extensively cooperate with the SFO by turning over important documents, to testify in any future trials, and to work with any competent foreign authority looking into the allegations, including the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC).
In 2011, DePuy agreed to pay £4.8 million in the UK as part of a civil recovery action while Johnson & Johnson paid $70 million to resolve investigations with the DOJ and the SEC that same year.
GIR reported in 2017 that Greek authorities relied on information publicly available from the 2011 deferred prosecution agreement between Johnson & Johnson and the DOJ, as well as on information provided by the SFO through a mutual legal assistance request, to build the case.
At the time, Greek prosecutors maintained that they could use the information provided by the UK for any lawful purpose, including criminal actions.
At trial, the SFO’s associate general counsel, Raymond Emson, clarified that the authority had not consented to the use of the material for the prosecution of Dougall and that continued use of the material could negatively affect the UK’s interests.
In an emailed statement, a spokesperson for the SFO said: “Mr Dougall was a cooperating witness from the outset, providing assistance through a SOCPA agreement after pleading guilty and being sentenced in relation to the SFO’s charge of conspiracy to make corrupt payments.
“The SFO was concerned that the use of SFO material in the prosecution of a cooperating witness would undermine the UK’s SOCPA scheme and adversely affect the interests of various parties. Raymond Emson, the SFO’s Associate General Counsel, provided oral evidence to the Greek court to explain this position.”
SFO director Osofsky has been vocal about the potential to work with cooperating defendants since becoming head of the agency in September 2018, and recently reiterated the authority’s capability to offer SOCPA deals while speaking at a GIR Live conference in London in June. A negative outcome in Greece’s prosecution of Dougall could have significantly undermined these efforts.
When Greek authorities first indicated their intention to prosecute Dougall and the other individuals, Dougall’s counsel based their defence on the double jeopardy principle – the right not to be prosecuted or punished twice for the same criminal conduct. The principle is enshrined under the European Convention on Human Rights, the Charter of Fundamental Rights of the European Union and the Schengen Agreement.
Dougall’s lawyers had also argued that the majority of the evidence used by Greece against Dougall would breach the principle of specialty, whereby a person extradited to a country to stand trial for criminal offences can only be tried for those particular offences and not for any other pre-extradition offences.
Dougall’s UK counsel, Shaul Brazil at BCL Solicitors in London, said that his client was pleased with the outcome of the case.
“He has always cooperated fully with the authorities throughout the course of the various investigations into this matter,” he said. “In many respects, his career has been blighted as a result of being caught up in a practice which was endemic in the market and pre-existed his involvement. He is relieved to finally be able to put this matter behind him.”
Ovvadias Namias at Namias Law, Dougall’s lawyer in Greece, said that the decision to acquit his client was important not just for Dougall but for the Greek legal system as a whole. According to Namias, it represents the first time that a Greek court has acquitted someone on double jeopardy grounds based on a case in another European jurisdiction rather than in Greece.
The end of the Greek trial comes off the back of US investigations into allegations of endemic bribery in the medical industry that first started in the late 2000s.
Apart from Johnson & Johnson, US authorities pursued a large number of companies as part of a widespread US investigation into bribery in the medical device sector: in 2012, Biomet paid $22.7 million to resolve allegations it bribed doctors at state-owned hospitals in Argentina, Brazil and China; Smith & Nephew paid a combined $22 million to settle DOJ and SEC allegations that the company bribed doctors in Greece; and Orthofix agreed to settle FCPA allegations in Mexico for $7.4 million.
A similar case against Zimmer Holdings ended with declinations from the DOJ and the SEC in December 2012 and February 2013, respectively, while a six-year investigation into medical device maker Medtronic was dropped. Stryker negotiated a $13.2 million settlement with the SEC to resolve allegations that it, too, had paid bribes in Greece, as well as in four other countries.
Counsel to John Coppack
Troufakos & Associates
Partner Grigorios Troufakos in Athens
In the UK
Partner Jonathan Cripwell in York
Counsel to Michael Dormer
Tzannetis Law Firm
Partner Aristomenis Tzannetis in Athens
In the UK
Simmons & Simmons
Partner Nick Benwell in London
Counsel to John Dougall
Partner Ovvadias Namias in Athens
In the UK
Partner Shaul Brazil in London
Counsel to Despina Filippou
Konstantinou Zissis and Associates
Partner Zissis Konstantinou in Athens
Counsel to Gary Fitzpatrick
Partner Ilias Anagnostopolous in Athens
In the UK
Howard & Byrne
Partner Colin Byrne in York
Counsel to Nicola Gifford
Georgios Pyromallis Law Office
Partner Georgios Pyromallis in Athens
In the US
Friedman Kaplan Seiler & Adelman
Partner Mary Mulligan in New York