DOJ Suspects J&J of Paying Illegal Bribes to Brazilian Government Officials
- J&J discloses DOJ investigation in quarterly SEC filing
- Second investigation in 10 years for violating the Foreign Corrupt Practices Act
- “This first case is just a tiny sliver of what is to come.”
Johnson & Johnson is being investigated for at least the second time in a decade for possible violations of the Foreign Corrupt Practices Act, according to the company’s quarterly SEC filing and a report in the FCPAblog.
The current U.S. probe grew out of an ongoing 2-year-old investigation in Brazil of American companies which are suspected of paying illegal bribes to government officials to secure contracts for medical equipment at inflated prices.
“Because the Brazilian government’s health budget is so huge, this scheme is truly massive,” Brazilian federal prosecutor Marisa Ferrari told Reuters in 2019. “This first case is just a tiny sliver of what is to come.”
The U.S. Foreign Corrupt Practices Act makes it illegal for American citizens, U.S. companies or foreign companies whose securities are listed in the United States to pay foreign officials to win business.
In 2011, J&J settled another Foreign Corrupt Practices Act case for $70 million. The DOJ found that the company paid bribes to public officials in Greece, Poland, Romania and Iraq to illegally sell more surgical implants and drugs. Some of J&J’s kickbacks corrupted the United Nation’s “Oil-for-Food” program which was intended to allow Iraq to sell oil to obtain food and medicine for its population without bolstering its military.
In the current FCPA case, Ferrari told Reuters in 2019 that the FBI and U.S. Securities and Exchange Commission had been working on the medical equipment the investigation with Brazilian prosecutors and sharing information.
In response to an inquiry by Reuters in 2019, J&J said in an emailed statement that it had noted in its October 2018 quarterly report that the U.S. Department of Justice and SEC “have made preliminary inquiries to the company” in regard to a raid by Brazilian federal police on its Sao Paulo offices and that the company was cooperating.
Johnson & Johnson, in its 2020 second quarterly filing dated July 24, confirmed for the first time that investigators were looking into possible violations of the Foreign Corrupt Practices Act.
“In July 2018 the Public Prosecution Service in Rio de Janeiro and representatives from the Brazilian antitrust authority CADE inspected the offices of more than 30 companies including Johnson & Johnson do Brasil Indústria e Comércio de Produtos para Saúde Ltda. The authorities appear to be investigating allegations of possible anti-competitive behavior and possible improper payments in the medical device industry. We continue to actively respond to inquiries regarding the Foreign Corrupt Practices Act from the United States Department of Justice and the United States Securities and Exchange Commission,” J&J reported on page 43 of its second quarterly report.
Ferrari described early results of the investigation as pointing to “widespread bribery and price gouging by firms looking to tap into Brazil’s public healthcare system, one of the world’s largest, serving 210 million people.”
Johnson & Johnson has been the target in recent years of numerous federal investigations involving, among other issues, illegal marketing of drugs such as Risperdal, the accuracy of company statements on the cancer risk of its talcum powder, and the company’s role in the national opioid crisis.
Resources cited in this article:
Johnson & Johnson 2nd Quarter Form 10-Q
The FCPA Blog: Johnson & Johnson Discloses New FCPA Investigation
DOJ Overview of the Foreign Corrupt Practices Act
