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Fresenius Medical Care AG settles with US Department of Justice over bribery charges
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Fresenius Medical Care AG & Co. KGaA has agreed to pay approximately $231 million to resolve a U.S. Department of Justice and Securities and Exchange Commission’s investigation into the company’s violation of the Foreign Corrupt Practices Act. In the settlement, Fresenius acknowledges it participated in various schemes, including the use of bribes, to obtain business in multiple countries.
“Fresenius doled out millions of dollars in bribes across the globe to gain a competitive advantage in the medical services industry, profiting to the tune of over $140 million,” Assistant Attorney General Brian A. Benczkowski, of the Justice Department’s Criminal Division, of the District of Massachusetts, said in a prepared statement. “Today’s resolution, under which Fresenius has agreed to retain an independent compliance monitor for at least 2 years, reflects the department’s firm commitment to both rooting out bribery and promoting the kind of effective corporate compliance programs that will prevent misconduct going forward.”
According to a press release from the DOJ, Fresenius paid bribes to publicly employed health and/or government officials in Angola and Saudi Arabia between 2007 and 2016 to obtain or retain business. In those countries, as well as in Morocco, Spain, Turkey and countries in West Africa, Fresenius “knowingly failed to implement reasonable internal accounting controls over financial transactions and failed to maintain books and records that accurately and fairly reflected the transactions,” according to the release.
In Angola, Fresenius offered or provided bribes to an Angolan military health officer and his family, as well as prominent Angolan government-employed nephrologists, according to the release.
In Saudi Arabia, Fresenius employed a check cashing scheme, entered into sham consulting and commission agreements for which no services were ever performed, entered into fake collection commission agreements, made payments to a government charity, gave gifts and made payments for travel with no business or educational justification, according to the release.
According to the DOJ release, Fresenius paid bribes to a Moroccan state official for the purpose of obtaining contracts to develop kidney dialysis centers at Moroccan state-owned military hospitals.
In Spain, Fresenius entered into fake consulting agreements with publicly employed doctors or professionals who could influence or provide information about public tenders, gave gifts or provided other benefits such as travel to medical conferences, and made donations to fund projects for the doctors, the release noted.
According to the release, Fresenius entered into joint ventures in Turkey with publicly employed doctors in exchange for those doctors directing business from their public employer to Fresenius Turkey clinics.
In West Africa, Fresenius paid bribes to publicly employed health officials in various countries, including Benin, Burkina Faso, Cameroon, the Ivory Coast, Niger, Gabon, Chad and Senegal, the DOJ release noted. Fresenius paid these bribes through a combination of direct payments, payments made through third parties and payments through a third-party distributorship to retain business in those countries, according to the release.
In a statement, Fresenius said it made DOJ officials aware in April 2012 of the bribes taking place.
“We are pleased to have concluded these investigations and to have resolved the issues that we identified and voluntarily disclosed to the U.S. authorities,” Fresenius Medical Care AG & Co. KGaA CEO Rice Powell said. “Since the investigation began, we have taken extensive steps to further a culture of ethical business behavior throughout the entire company and to strengthen our compliance programs and internal controls. And we will continue to do so in close cooperation with the authorities. Enhancing these programs is an ongoing effort that will also help us to improve our service to our patients, which is our primary mission.”
The DOJ acknowledged that Fresenius voluntarily self-disclosed the misconduct but said the company did not respond in a timely manner to certain requests and, at times, did not provide full responses to requests for information. Misconduct continued in certain countries until 2016, the DOJ said.
References: www.freseniusmedicalcare.com/en/media/news/details/detail/News/fresenius-medical-care-resolves-fcpa-investigation
www.justice.gov/opa/pr/fresenius-medical-care-agrees-pay-231-million-criminal-penalties-and-disgorgement-resolve
www.justice.gov/usao-ma/pr/fresenius-medical-care-agrees-pay-231-million-resolve-foreign-corrupt-practices-act