RIO DE JANEIRO (Reuters) – FBI investigates corporate giants Johnson & Johnson, Siemens, General Electric and Philips for allegedly paying refunds as part of a scheme involving the sale of medical equipment in Brazil, two Brazilian investigators told Reuters .
A Johnson & Johnson building is shown in Irvine, California, USA, January 24, 2017. REUTERS / Mike Blake
Companies are suspected by Brazilian actors to channel illegal payments to governments to secure public health contracts over it South American country over the past two decades.
Brazilian authorities say that more than 20 companies may have been part of a "cartel" that paid bribes and charged government inflated prices on medical devices such as magnetic resonance imaging machines and prostheses. The four multinational companies, with a combined market capitalization of nearly $ 600 billion on Thursday's market, are the largest foreign companies to be investigated in an unprecedented corruption fight in Brazil in recent years.
Major US and European firms who have been guilty of offenses in Brazil may also face major fines and other penalties under the US Foreign Corrupt Practices Act (FCPA). Since 1977, the law has made it illegal for US citizens, US companies or foreign companies whose securities are listed in the United States to pay foreign officials to win business.
Foreign companies are the last targets of the government's corruption probes in Brazil. Over the past five years, prosecutors have uncovered pervasive transplantation in state institutions and private companies wishing to do business with them.
The extensive investigations by prosecutors and federal police, including the famous "Car Wash" network centered on Brazil's state-run oil company Petrobras, have topped business and political leaders across Latin America.
Authorities say remuneration statements taken from suspects notified them of other possible schemes, including alleged bribes paid by multinational corporations to procure public contracts in Brazil.
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Brazilian case lawyer Marisa Ferrari confirmed in an interview with Reuters that the US authorities from the Ministry of Justice and the Securities and Exchange Commission were assistant in the Brazilian medical examination she is assisting with.
In 2016, US and Brazilian actors jointly negotiated the world's biggest criminal case, a $ 3.5 billion fine against Brazilian construction conglomerate Odebrecht SA for its part in the car wash scandal.
"We are constantly sharing information with the FBI on this (medical device) case. They are asking for documents and we are sending them and they are helping our investigation in return," Ferrari said. In addition, Ferrari said: "We have received a lot of material from the Ministry of Justice and from the SEC."
She refused to mention which companies US police authorities were investigating.
Two Brazilian investigators with direct knowledge of the case confirmed that Reuters that Johnson and Johnson, Siemens AG, General Electric Co and Koninklijke Philips NV were targeted by the FBI for alleged bribery in Brazil. People asked for anonymity because they were not authorized to discuss the US side of the survey.
The FBI did not want to confirm or deny the existence of investigations. The SEC, which also investigates FCPA claims, said via e-mail that it refused to comment.
Boston-based GE refused to comment on any investigations related to its business in Brazil. In a pronounced statement it said that "we are committed to integrity, compliance and the law of Brazil and all other countries in which we operate."
Siemens, based in Munich, said in an e-mail statement that the firm "is not aware of any FBI investigation of the company related to cartel activity in Brazil." It said that the policy is always to cooperate with law enforcement investigations when they arise.
Amsterdam-based Philips confirmed in an email that it is under investigation in Brazil. In its 2018 annual report, Philips confirmed that it "has also received inquiries from certain US authorities on this matter."
In his email to Reuters, Philips said "it is not uncommon for US authorities to show interest in these cases and it is too early to draw any conclusions."
New Jersey, Johnson and Johnson in New Jersey. said in an e-mail reply that the Justice Department and the SEC "have made preliminary investigations to the company" in respect of a raid by the Brazilian federal police in their office in Sao Paulo last year and that the firm is cooperating.
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Ferrari, the Brazilian prosecutor, said that the medical equipment survey was in its early stages. Still, she said evidence of widespread bribery and price releases of companies wishing to tap into Brazil's public health service, one of the world's largest, serving 210 million people.
"Because the Brazilian government's health budget is so large, this scheme is really massive," Ferrari said. "This first case is just a small part of what comes."
In addition to paying refunds through intermediaries to secure contracts, some vendors charge inflated prices to Brazil's government – up to eight times the market price – to cover the cost of their bribery, according to the prosecution and prosecution court.
GE's former CEO of Latin America, Daurio Speranzini, and 22 others were charged last year in the first case related to the alleged scheme.
Prosecutors say the case, focusing on the State of Rio de Janeiro, saw Brazilian taxpayers have plotted at least 600 million reais ($ 149.38 million) between 2007 and 2018 through cushioned contracts awarded to curly medical device vendors.
Lawyers for Speranzini, who pulled GE in November, said via e-mail that he is innocent.
Prosecutors claim that Speranzini first participated in the cartel as leader of the Philips Healthcare operation in Latin America from 2004 to the end of 2010. A whistleblower told Philips & # 39; s compliance office about the scam, and Speranzini was fired for an internal probe , according to the documents.
He was hired by GE a few months after leaving Philips. Investigators say they have strong evidence that Speranzini continued with the scheme while in GE.
GE refused to comment on Speranzini's employment or departure from the company.
($ 1 = 4.0165 reais)
Reporting by Brad Brooks; Editing by Marla Dickerson