Orthopedic devices maker Orthofix (NSDQ:OFIX) settled a years-long investigation into allegations of bribery stemming from a former Mexican distributor, paying a total of more than $7.4 million in disgorged profits and fines.
The company entered into a deferred prosecution agreement with the U.S. Justice Dept. and a consent to final judgement with the Securities & Exchange Commission, avoiding criminal charges related to the investigation.
Orthofix in 2010 launched an internal investigation and voluntarily notified the DOJ after catching wind that some members at former distributor Promeca S.A. de C.V. had bribed Mexican government health officials, according to SEC filings.
Promeca accounted for about 1% of Orthofix’s consolidated net sales and consolidated total assets, according to company documents.
Orthofix completed its investigation in April 2011 and the DOJ issued a subpoena in November 2010 for potentially criminal violations of the Foreign Corrupt Practices Act.
The bribes, which included cash, laptops, televisions and appliances, were referred to as "chocolates" and may have been responsible for about $5 million in illegal profits, the Wall Street Journal reported.
The orthopedics devices maker entered into definitive agreements with the DOJ and SEC, Orthofix announced today, paying $5.2 million in disgorged profits and another $2.2 million in fines, according to an SEC filing.
During the term of the deferred prosecution agreement Orthofix will periodically report to the DOJ regarding its enhanced compliance and ethics programs designed to curtail any future breaches of FCPA.
Orthofix had already set aside $7.5 million in charged noted on previous quarterly earnings reports in anticipation of a settlement, according to SEC filings.
The device maker has been on a roll, with more than $40 million paid last month after pleading guilty and settling a federal case regarding illegal promotion of its bone-growth stimulators.
