Biomet Inc. said that a third-party distributor in the Middle East sold some of its dental products in Iran, violating the terms of their agreement.
Responding to a March 19 letter from Cecilia Blye, chief of the U.S. Securities & Exchange Commission’s office of global security risk, Biomet said in a regulatory filing that the deal limited sales to specific countries. That means "any sales to customers in Iran since the beginning of fiscal year 2010 violated that agreement," according to the filing.
"The company is considering its rights and remedies against this distributor in connection with these violative sales," Biomet said, noting that the amount of the resales in Iran were $434,205, $540,749 and $379,967 for fiscal years ended May 31, 2009, 2010 and 2011, respectively.
The SEC also wanted some answers about Biomet’s sales in Syria. That country and Iran are on the U.S. State Dept.’s list of state sponsors of terrorism "and are subject to U.S. economic sanctions and export controls," according to the SEC.
Biomet said all sales to those countries are made via foreign subsidiaries that, in turn, sell to third-party distributors.
"To our knowledge, neither the company nor any of its distributors has entered into arrangements with or sold products to persons included on the Specially Designated Nationals List administered by the U.S. Office of Foreign Asset Control," according to the filing. "The company does not maintain any direct sales activity or operations, nor does it employ any persons, in Iran or Syria. The company’s non-U.S. subsidiaries do, however, have certain limited, non-sales related contacts with customers in Syria."
Biomet has 1 distributor that sells orthopedic devices into Syria, it said, adding that during fiscal 2010 it also sold in Syria via a 2nd distributor.
"Product sales to these distributors were and currently are conducted through 1 or more non-U.S. subsidiaries of the company and products are shipped from manufacturing facilities outside the United States," Biomet said. "All products sold are of European, not U.S., origin, and to the extent that any of them has U.S. content, the U.S. content amounts to less than 10%.
"Therefore, the company believes neither the sale nor the export of products requires a U.S. export license. From time to time and on an infrequent basis, non-U.S. employees of the company’s non-U.S. subsidiaries have had and are expected to continue to have contact with Syrian customers, which may include employees of public (government-owned) hospitals, regarding training in the proper use of company products. The company has no commercial contacts with Syrian customers."
The explanations must have satisfied the SEC and Blye, who closed the commission’s investigation in a May 23 letter to Biomet.
