Johnson & Johnson, DePuy Pay $76.9M To Settle Foreign Bribery Claims

(Mealey's) - Johnson & Johnson (J&J) and subsidiary DePuy International Ltd. will pay $76.9 million to resolve criminal and civil allegations in the United States and in the United Kingdom that they paid kickbacks to doctors in Greece, Poland, Romania and Iraq to use the companies' drugs and medical devices, authorities announced April 8.

The U.S. Justice Department said J&J agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement for improper payments by J&J subsidiaries to public health care providers in Greece, Poland and Romania in violation of the Foreign Corrupt Practices Act (FCPA).  The Justice Department said the agreement also resolves kickbacks paid to the former Iraq government under the United Nation's Oil for Food Program.

The Justice Department said it filed a criminal complaint in the U.S. District Court for the District of Columbia against DePuy Inc. for conspiracy and violations of the FCPA.

The Justice Department, Securities and Exchange Commission and the United Kingdom's Serious Fraud Office each said that J&J self-reported the violations to them and its cooperation was taken into consideration in determining the resolution of the investigations and the fine and settlement amounts.  The Justice Department said the defendants' timely disclosure, self-investigation and "extraordinary cooperation" helped with the department's "industry-wide investigation."

Due to its "pre-existing compliance and ethics programs, extensive remediation, and improvement of its compliance systems and internal controls," the Justice Department said Johnson & Johnson will not be required to retain a federal monitor but must make six-month reports on the progress of its remediation and compliance efforts.

On April 8, the SEC filed a civil complaint against Johnson & Johnson in the U.S. District Court for the District of Columbia, alleging that the company's subsidiaries and employees paid bribes to publicly employed doctors in Greece, Poland, and Romania and that they paid kickbacks in Iraq to get contracts under the U.N. Oil for Food Program. 

The SEC alleges violations of the Securities and Exchange Act of 1934.

At the same time the complaint was filed, the SEC said the company agreed to disgorge $38.2 million in profits and pay $10.4 million in prejudgment interest.

Also on April 8, the U.K. Serious Fraud Offices announced that DePuy International Ltd., based in Leeds, England, agreed to pay $6.9 million plus prosecution costs for paying 20 percent kickbacks to Greek doctors in exchange for using the company's orthopedic devices. 

The Serious Fraud Office said Greek authorities have frozen $8.3 million in assets of DePuy Hellas, a DePuy Greek subsidiary.

[Editor's note: The SEC complaint is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #28-110421-002Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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For more information, call editor Tom Moylan at 215-988-7739, or e-mail him at tom.moylan@lexisnexis.com.