A local medical device maker agreed yesterday to pay $5.2 million to settle a charges that it systematically bribed officials to win sales contracts with government hospitals in Mexico in violation of the Foreign Corrupt Practices Act.
According to a complaint filed by the SEC, Promeca, the Mexican subsidiary of Lewisville-based Orthofix, routinely gave cash and gifts, including laptops, TVs, travel packages, and, in one case, a Volkswagen Jetta, to employees of Mexico's government-run health care and social services agency in exchange for sales contracts that got them about $5 million. The practice was so routine that company officials referred to the bribes as "chocolates." As in "I'm going to give this guy some chocolate and he's going to give me several million dollars of taxpayer money."
Because bribing the government is illegal, the company falsified documents and recorded the payments as cash advances and expenses for things like meals and new car tires, which also violates the FCPA.
As Kara Novaco Brockmeyer, chief of the SEC Enforcement Division's FCPA unit, noted in a press release: "Once bribery has been likened to a box of chocolates, you know a corruptive culture has permeated your business."
But lest you assume that Orthofix's alleged corruption are limited to its Mexican subsidiary, check out this report from Bloomberg. Seems that quite recently -- a month ago in fact -- its parent company paid $42 million to settle claims that it defrauded Medicare and obstructed a U.S. government audit. For example, Orthofix was reimbursed by Medicare for $5,000 bone-growth stimulators that, on eBay, go for about $50. Five Orthofix employees pleaded guilty on related charges. like setting up fake consulting agreement for doctors who used the company's products.
So doctors, if you're in the market for a Volkswagen Jetta or maybe a vacation home, you know who to call.
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