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U.S. v. DePuy, Inc.

 
:
Johnson & Johnson - DePuy, Inc.
:
DOJ Criminal
:
April 8, 2011
:
U.S. v. DePuy, Inc.
:
U.S. v. DePuy, Inc. 1:11-cr-00099-JBD (D.D.C. 2011)
:
DePuy, Inc. is a wholly-owned subsidiary of Johnson & Johnson Services, Inc. At the time of the company’s settlements with the DOJ and the SEC, the aggregate penalty of $79MM was among the 10 largest amounts paid by a corporation to resolve FCPA charges.
:
Healthcare-Other/Multi
:
Greece
:
1998; 1999; 2000; 2001; 2002; 2003; 2004; 2005; 2006
:
Publicly employed doctors in Greece
:
Johnson & Johnson acquired DePuy, Inc., another medical device company, in 1998. At that time, DePuy's subsidiary, Depuy International, was allegedly engaged in a widespread bribery scheme through a Greek distributor, and executives at Johnson & Johnson were aware of and complicit in that scheme after the acquisition. From at least 1998 to 2006, DePuy International, through a Greek distributor which it later acquired, paid bribes and consipired to pay bribes to public doctors in Greece who selected Johnson & Johnson surgical implants for use in various medical procedures. The scheme was perpetrated via a complicated web of transactions through distributors and agents which paid bribes paid as commissions overseas. The scheme was furthered by a high-level executive. In total, DePuy and their subsidiaries and employees authorized the payment, directly or indirectly, of approximately $16.4 million, knowing that a significant portion was used to pay cash incentives to publicly-employed Greek heathcare providers to induce the purchase of DePuy products.

In addition, other Johnson & Johnson subsidiaries paid kickbacks to the former government of Iraq under the United Nations Oil for Food Program in order to secure contracts to provide humanitarian supplies.

After the Oil-for-Food investigation began, Johnson & Johnson self-disclosed additional wrongdoing and conducted wide-reaching internal investigations. Johnson & Johnson's proactive self-investigations in more than a dozen countries were critical in determining the full extent and underlying facts related to the company's FCPA violations. The company acknowledged wrongdoing and agreed to pay a $21,400,000 criminal penalty as part of a deferred prosecution agreement. As part of the deferred prosecution, the DOJ filed a criminal information against DePuy, Inc., charging it with conspiracy, aiding and abetting, and substantive violations of the FCPA. Johnson & Johnson acknowledged responsibility for the actions Depuy, Inc., as well as other of its subsidiaries, employees, and agents who made various improper payments to publicly-employed health care providers in Greece, Poland and Romania in order to induce the purchase of medical devices and pharmaceuticals manufactured by its subsidiaries.

The deferred prosecution agreement expressly gives Johnson & Johnson credit for its self-disclosure, self-investigation, and ongoing compliance measures thus reducing the monetary penalty. Although the settlement does not require that Johnson & Johnson employ a corporate monitor, it must report to the DOJ on compliance efforts bi-yearly for the duration of the agreement.
:
Aiding and abetting anti-bribery, Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
:
Deferred-prosecution Agreement, Fine
:
Criminal penalty of $21,400,000
:
21,400,000
:
0
:
Total Offense Level: 34 (Base Offense of 12 plus Benefit of 22 plus Multiple Bribe of 2 minus Substantial Assistance of 2)
Culpability Score: 5 (Base Score of 5 plus Large Organization High Level Personnel of 5 minus Cooperation of 5)
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Issuer
:
U.S.
:
United States
:
Contract Procurement/Retention
:
Not stated.
:
Cash, Travel, Wire/check
:
Sales Agent/Consultant, Subsidiary Company
:
Not stated.
:
Greece
:
Yes
:
Yes
:
United Kingdom