The FCPA Blog

The SEC's just-announced investigation of several orthopedic device makers for possible violations of the U.S. Foreign Corrupt Practices Act (reported here) probably originated in February 2007. That's when Johnson & Johnson said it had "voluntarily disclosed to the U.S. Department of Justice and the U.S. Securities and Exchange Commission that subsidiaries outside the United States are believed to have made improper payments in connection with the sale of medical devices in two small-market countries. "

At the same time, Johnson & Johnson said Michael J. Dormer, Worldwide Chairman of its Medical Devices & Diagnostics group, had retired. The company said, "In a letter to Johnson & Johnson, Mr. Dormer cited the internal review of these matters and noted he had 'ultimate responsibility by virtue of my position' for those subsidiaries that were the subject of the disclosure." Dormer started his career with Johnson & Johnson in the 1970s. He later worked for device-maker Depuy Orthopedics for six years until Johnson & Johnson acquired it in 1998.

Johnson & Johnson's self-disclosure about potential FCPA violations would have given the SEC and DOJ a quick start in examining the overseas practices of orthopedic device makers. But before prosecutors turned their attention to the FCPA, they apparently wanted to first resolve the domestic bribery cases against Depuy and its peers -- Biomet, Zimmer, Smith & Nephew and Stryker. The DOJ announced a settlement of the domestic bribery cases on September 27, 2007, and the SEC's investigative letters about potential FCPA violations went out to the companies just two weeks later.

View Johnson & Johnson's February 12, 2007 Press Release Here.