Payment of kickbacks to government officials to secure contracts in the Brazilian health sector has put multinational companies at the cross paths with the authorities. The loss of public resources due to the highly inflated prices for medical equipment has raised concern prompting investigations.
Among the companies facing investigations include the Boston-based General Electric, Amsterdam based Philips, Johnson & Johnson based in New Jersey, and Munich-based Siemens. The targeted multinationals are the largest foreign companies to be investigated in Brazil on corruption allegations in the recent past.
Apart from the likely punitive measures the companies will face from the Brazilian authorities, they are also likely to be heavily fined under U.S. Foreign Corrupt Practices Act (FCPA) which prohibits U.S. citizens or companies from engaging in corruption in other countries to win business.
According to the authorities, it is as a result of plea-bargain arrangements with suspects that has disclosed the widely spread corruption rings led by multinationals. The investigations which have touched on the Petrobas, the state-run oil company, have shaken everyone in the country.
According to Marisa Ferrari, the country’s federal prosecutor, in an interview with Reuters, U.S. Justice Department and the Securities and Exchange Commission (SEC) are involved in the investigation of the medical equipment scandal. She, however, declined to mention the companies under investigation.
According to two anonymous Brazilian investigators with inside information on the investigations, they confirmed that GE, Siemens, Philips, and Jonson & Johnson were targeted by the FBI on bribery allegations in Brazil. The same could not be confirmed nor denied by the FBI.
GE could not comment on the issue and only stated their commitment to integrity, rule of law, and compliance in their business. Siemens denied knowledge of any investigation on its operation by FBI in Brazil and further stated its willingness to cooperate with the law enforcement agencies. Philips, however, confirmed through email that it was under investigation in Brazil. Johnson & Johnson also confirmed that SEC and Department of Justice have made inquiries regarding the company operations in Brazil.
Brazilian health sector is among the largest in the world, and, according to Marisa Ferrari, the evidence on the medical equipment investigation which was still in its preliminary stage pointed to widespread bribery and inflated pricing by firms. The inflated prices, according to the prosecutor, were to cover the cost incurred in bribing of the officials.
The first case of such dealing involved the former GE’S chief executive Daurio Speranzini who was charged together with 22 others in 2018. According to the prosecutors, it deprived the tax payers 600 million reais in a period of 11 years until 2018.
Speranzini lawyers have defended him by saying that he was not working with the firm when the alleged malpractices took place. The prosecution, on the other hand, is relying on a plea-bargain by former Rio de Janeiro state health secretary Cesar Romero who confirmed that, indeed, GE participated in the fraudulent dealings.
Furthermore, according to the prosecution, Speranzini was first involved when he was working for Philips between 2004 and 2010 when he was fired and thereafter hired by GE where he further promoted the dealings.