Zimmer Biomet to pay feds another $30m in foreign bribery case

January 12, 2017 By Brad Perriello

Zimmer Biomet (NYSE:ZBH) agreed to pay another $30 million to settle a foreign bribery case with the U.S. Justice Dept. and the Securities & Exchange Commission, after a 1st $22 million settlement nearly 5 years ago.

The DoJ alleged that Biomet and its subsidiaries paid out more than $1.5 million in illegal kickbacks to employees of state-owned health services in Brazil and China. Biomet paid $22 million in March 2012 to settle the case with Justice and the SEC, agreeing to a deferred prosecution agreement to guard against further misconduct (Zimmer and Biomet closed their $14 billion merger in June 2015).

But in July 2014, an SEC subpoena prompted Biomet to reveal other alleged improprieties at its operations in Brazil and Mexico, prompting an extension to the DPA and a new federal probe beyond the term of the agreement.

Last month, prosecutors said they were close to reaching a settlement, in a filing with the U.S. District Court for the District of Columbia.

The SEC said today that it found that the company “continued to interact and improperly record transactions with a known prohibited distributor in Brazil, and used a 3rd-party customs broker to pay bribes to Mexican customs officials to facilitate the importation and smuggling of unregistered and mislabeled dental products.”

“Biomet didn’t entirely learn its lesson the first time around as it continued to use a prohibited agent in Brazil and engaged in a new bribery scheme in Mexico,” Kara Brockmeyer, chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act unit, said in prepared remarks.

The penalties include more than $5.8 million in disgorgement, $702,705 in interest and nearly $24 million in fines. Zimmer Biomet also agreed to hire an independent FCPA monitor for 3 years, the SEC said.

“We are pleased to have reached this resolution involving legacy Biomet FCPA compliance matters,” Zimmer Biomet general counsel Chad Phipps said in prepared remarks. “Zimmer Biomet is committed to upholding the highest ethical and legal standards in our business practices across the globe, and we look forward to continuing to integrate the legacy Biomet business operations into our robust corporate compliance program.”

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