11.05.14
Bio-Rad Laboratories, a company that makes scientific and clinical diagnostic gear, has agreed to pay $55 million to settle U.S. criminal and civil charges of paying kickbacks to government officials in Russia, Vietnam and Thailand.
The settlement was announced Nov. 3 by the Securities and Exchange Commission (SEC) and the U.S. Department of Justice.
The company escaped criminal prosecution under the Foreign Corrupt Practices Act because it disclosed the violations of its subsidiaries when it discovered them in 2010, then assisted with the investigation.
In Vietnam, a sales representative of Bio-Rad authorized payment of bribes to government officials, including the hiring of a middleman to pay the bribes, according to the SEC. Bio-Rad's sales manager agreed to the practice, fearing that the company would lose 80 percent of its sales if it stopped paying bribes, the SEC's complaint said.
In Thailand, Bio-Rad invested in a local company in 2007 that had an ongoing bribery scheme. An agent of the company received inflated commissions which were split with Thai government officials, the complaint said. The SEC issued a cease-and-desist order against Bio-Rad and the Justice Department launched a criminal investigation, both of which were settled with the $55 million penalties.
The settlement includes $40.7 million in revenue it made from the sales, along with a penalty, to the Securities and Exchange Commission and a $14.35 million penalty to the Justice Department.
"Public companies that cook their books and hide improper payments foster corruption," Assistant Attorney General Leslie Caldwell said in a statement.
"The Department also gives credit to companies, like Bio-Rad, who self-disclose, cooperate and remediate their violations" of the Foreign Corrupt Practices Act, he said.
Bio-Rad was founded in 1952 in Berkeley, Calif. Last year, it posted $2.1 billion in sales, $77.8 million in net income and a workforce of more than 7,800.
Bio-Rad President/CEO Norman Schwartz said he was "pleased the settlement resolves the government's FCPA investigation and puts this matter behind us."
The Department of Justice and the SEC said Bio-Rad subsidiaries in Europe and Asia bribed government officials from 2005-2010 with payments to phony middleman companies. Bio-Rad executives ignored the payments, which were so obvious that they should have spotted them, the federal investigators said. One Russian middleman company even used a phony address that actually was the address of a Russian government building, according to the SEC.
Large commissions to companies that didn't have the resources to perform any of the contracted services should have raised an alarm, the complaints said. Also, the payments were made through banks in Latvia and Lithuania, another alleged red flag. Yet several "high level" Bio-Rad managers approved the payments, the Justice Department said.
The settlement includes $40.7 million in revenue it made from the sales, along with a penalty, to the Securities and Exchange Commission and a $14.35 million penalty to the Justice Department.
"Public companies that cook their books and hide improper payments foster corruption," Assistant Attorney General Leslie Caldwell said in a statement.
"The Department also gives credit to companies, like Bio-Rad, who self-disclose, cooperate and remediate their violations" of the Foreign Corrupt Practices Act, he said.
Bio-Rad was founded in 1952 in Berkeley, Calif. Last year, it posted $2.1 billion in sales, $77.8 million in net income and a workforce of more than 7,800.