Court Cases, Extractive (incl. oil & gas), Manufacturing, Medical (incl. medical device & pharma), Money laundering, US Foreign Corrupt Practices Act & Dodd Frank - Written by Barry & Richard on Friday, April 8, 2011 15:52 - 0 Comments
De Puy International a case study in the interplay between the US and the UK
“When Johnson & Johnson reported the DePuy corruption, the DOJ informed the SFO of issues within our jurisdiction. We worked with the DOJ to find a solution that served both the interests of justice and the company’s desire to put illegal activity behind it and move on. I believe the order approved in the High Court today will illustrate to other companies how the SFO works closely with organisations across the world in enforcing the highest ethical standards, but is willing to engage and listen to companies that come to us with problems and help them find solutions”.
In its press release the SFO said “those who commit serious fraud and /or Corruption offences must not be viewed or treated in any different way to other criminals; serious criminality should be made patent for all to see.”
Payments were made by DePuy to intermediaries who in turn made corrupt payments to healthcare professionals in the Greek equivalent of the NHS. Mr Dougall, a former De Puy executive was convicted of his part in the arrangements last year.
The US settlement and life science sector investigation
In the US Johnson & Johnson is to pay a $21.4 million penalty to resolve criminal FCPA charges with the DOJ and $48.6 million in disgorgement and prejudgment interest to settle the SEC’s civil charges. The US DOJ press release says:
“Johnson & Johnson, however, has also cooperated extensively with the government and, as a result, has played an important role in identifying improper practices in the life sciences industry. As today’s agreement reflects, we are committed to holding corporations accountable for bribing foreign officials while, at the same time, giving meaningful credit to companies that self-report and cooperate with our investigations.”
This statement appears to confirm what we have thought for some time, namely that this case has been at the centre of the US sector investigation into medical devices and pharmaceuticals.
The UK uses POCA – again
The use of the Civil Recovery Order using Proceeds of Crime laws in this instance and in a case in February 2011 demonstrates their continued use in the UK notwithstanding the criticism of their use in corruption cases in Innospec and by some commentators.
We have been saying consistently that the use of Civil Settlements is important in UK corruption cases and this is emphasised by their use this year.
In this instance, neutralising any potential criticism of the use of a civil settlement criminal penalty was obtained through the US Deferred Prosecution Agreement with DePuy International Limited’s parent company and the DOJ.
The SFO concluded UK double jeopardy rules prevented the prosecution for the same facts in the UK.
The investigation concluded that sales of around £33.5 million flowed from the illegal activity and that of this approximately £14.8 million of this passed from the Greek intermediary to DePuy International Limited.
It is reported that the Greek authorities have restrained €5.785 million of the company’s assets.
In light of this the SFO therefore took the view that it would not be appropriate to apply for recovery of £14.8 million and obtained a Civil Recovery Order for £4.829 million.
The SFO press release states:
“The Serious Fraud Office has considered the matter from a global perspective. It has worked to achieve a sanction in this jurisdiction which will form part of a global settlement that removes all of the traceable unlawful property and at the same time imposes a penalty.”
Another brick in the wall of international co-operation and investigation in anti-corruption cases and a clear sign of the direction of travel…