Medical diagnostics and life sciences manufacturing and sales company Bio-Rad Laboratories, Inc. has agreed to pay $55 million to settle related SEC and DOJ charges that it violated the Foreign Corrupt Practices Act (“FCPA”). In the SEC matter, California-based Bio-Rad agreed to pay $40.7 million in disgorgement and prejudgment interest to resolve allegations that the company made improper payments to foreign officials in Russia, Thailand, and Vietnam to win business. In the DOJ matter, the company agreed to pay $14.35 million in criminal fines to resolve allegations that it falsified its books to hide the payments and failed to implement adequate internal controls to prevent bribery and corruption.
The scheme in Russia included making excessive payments disguised as commissions to foreign agents with phony Moscow addresses and off-shore bank accounts to influence Russia’s Ministry of Health and help the company win bids for government contracts. Bio-Rad also used local intermediaries in Vietnam and Thailand to funnel bribes through to foreign officials in exchange for business.
After Bio-Rad discovered the misconduct, it self-reported to US government authorities and worked closely with the government in an investigation. The SEC found the company lacked sufficient internal controls to prevent or detect approximately $7.5 million in bribes that were paid during a five-year period and that these improper payments helped Bio-Rad earn $35 million in illegal profits.
SEC Division of Enforcement Director Andrew J. Ceresney stressed that “this enforcement action…reiterates the importance of all companies ensuring they have the proper internal controls to prevent FCPA violations.” Since self-reporting, the SEC stated that Bio-Rad has engaged in significant remedial actions, including “enhancing its anti-corruption policies globally, improving its internal controls and compliance functions [and] developing and implementing additional due diligence and contracting procedures for intermediaries…”
Bio-Rad President and CEO Norman Schwartz said in a statement that “the actions that we discovered were completely contrary to Bio-Rad’s culture and values and ethical standards for conducting business.” He said the company “took strong, decisive action to end the problematic practices and prevent anything like this from happening in the future.” Bio-Rad has every incentive to prevent a repeat of this misconduct: the DOJ allowed the company to avoid criminal prosecution so long as it continues to make progress on its compliance programs and periodically reports on those efforts for a two-year period.
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