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U.S. v. Zimmer Biomet Holdings, Inc.

 
:
Zimmer Biomet Holdings, Inc.
:
DOJ Criminal
:
January 12, 2017
:
U.S. v. Zimmer Biomet Holdings, Inc.
:
U.S. v. Zimmer Biomet Holdings, Inc., No. 1:12-cr-00080 (D.D.C. 2012)
:
Healthcare-Medical Devices
:
Brazil, Mexico
:
2009; 2010; 2011; 2012; 2013
:
Unnamed Mexican customs officials; Unnamed Brazilian government officials.
:
Biomet, Inc. is a medical device company headquartered in Warsaw, Indiana that sells medical devices and dental products. Prior to 2008, Biomet’s stock was registered with the Commission. In March 2012, Biomet entered into a deferred prosecution agreement with the DOJ for FCPA violations in Brazil, China, and Argentina. In June 2015, Biomet was acquired by Zimmer Holdings, Inc. and was renamed Zimmer Biomet.

According to the DOJ, despite being aware of red flags and prior corruption- related misconduct in Biomet’s Mexican and Brazilian subsidiaries, and despite entering into a 2012 DPA with the DOJ in connection with corruption in Brazil and other countries, Biomet knowingly failed to implement and maintain an adequate system of internal controls designed to detect and prevent bribery by its agents. As a result, the DOJ alleged that Biomet’s Mexican and Brazilian operations violated the FCPA.

In Mexico, the DOJ alleged that Biomet’s subsidiaries used a customs broker whose subagents bribed Mexican customs officials to allow Biomet to export mislabeled products to Mexico. According to the DOJ, between 2010 and 2013, Biomet’s Mexican subsidiary paid approximately $980,774 to the customs broker’s subagents, knowing that at least part of this amount would be passed on to customs officials, and falsified corporate records to disguise the bribe payments.

In Brazil, Biomet allegedly knew that a Brazilian distributor it was utilizing had previously paid bribes to win business for Biomet, leading to the 2012 DPA. According to the DOJ, as a result, Biomet prohibited its employees from using all companies affiliated with the Brazilian distributor. Despite prohibiting Biomet from utilizing the Brazilian distributor, Biomet employees, including an executive, allowed the Brazilian distributor to sell, import, and market Biomet products through a separate, but related, company and took steps to conceal the transactions.

On January 12, 2017, the DOJ announced that it had entered into a deferred prosecution agreement with Biomet for violations of the internal controls provision of the FCPA. According to the deferred prosecution agreement, Biomet was required to pay a criminal penalty of $17,460,300. Biomet was also required to engage an independent compliance monitor for a period of three years. The SEC separately resolved an enforcement action against Biomet wherein the company agreed to pay a civil sanction of $13,022,805.
:
Internal controls (Issuer)
:
Compliance Monitor, Deferred-prosecution Agreement
:
Biomet was required to pay a criminal penalty of $17,460,300.
:
17,460,300
:
0
:
Domestic Concern, Issuer
:
U.S.
:
United States
:
Contract Procurement/Retention, Customs Clearance
:
Not stated.
:
Cash
:
Sales Agent/Consultant, Subsidiary Company
:
Not stated.
:
Brazil, Mexico
:
No
:
No