SEC targets execs, auditors in Biomet FCPA case

Top officials and auditors allegedly failed to stop bribery

In the latest settlement to come out of an ongoing enforcement focus on Foreign Corrupt Practices Act (FCPA) violations in the medical device industry, Biomet Inc. agreed March 26 to pay more than $22 million to settle Securities Exchange Commission (SEC) and parallel criminal charges related to the company’s activities in Argentina, Brazil and China.

The SEC charged Biomet with violating the FCPA, alleging that its subsidiaries paid bribes to publicly employed doctors in Latin America and China between 2000 and 2008; that company executives and internal auditors failed to stop the payments after becoming aware of them as early as 2000; and that the company routinely concealed the payments though false documents. In Brazil alone, the company paid a total of $1.1 million in bribes.

Audit Failure

The SEC’s complaint details how, beginning in 2000, executives and auditors on the ground in the foreign countries and at Biomet’s Warsaw, Ind., headquarters became aware of payments to doctors in Latin America and China, but the practice continued.

Device Sweep

Biomet’s is the third FCPA settlement in the medical device industry, following Johnson & Johnson in April 2011 and Smith & Nephew in February. Medtronic Inc., Stryker Corp., Zimmer Holdings Inc. and Wright Medical have also disclosed FCPA investigations.

Associate Editor

Melissa Maleske

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