Johnson & Johnson will pay a $21.4 million penalty to resolve criminal FCPA charges with the DOJ and $48.6 million in disgorgement and prejudgment interest to settle the SEC’s civil charges.
A criminal information filed by the DOJ in federal court in the District of Columbia today charged J&J subsidiary DePuy Inc. with conspiracy and violations of the FCPA through payments to public-sector doctors in Greece.
The SEC charged the company in a civil complaint with antibribery, books and records, and internal controls violations of the FCPA.
In the United Kingdom, DePuy International Limited settled corruption charges brought by the Serious Fraud Office. The company was ordered by the High Court to pay £4.8 million in a civil recovery action.
According to the DOJ, Johnson & Johnson "cooperated extensively with the government and, as a result, has played an important role in identifying improper practices in the life sciences industry."
Medical-device makers Biomet Inc., Stryker Corp., Zimmer Holdings Inc., Smith & Nephew plc and Medtronic Inc. disclosed FCPA investigations during 2007; Wright Medical reported a similar investigation in June 2008.
The DOJ and SEC both said they reduced Johnson & Johnson's financial penalties in light of the company's civil penalties in the U.K. In its release, the SFO referred to the "global" settlement and also said Greek authorities "have frozen the assets of the company DePuy Hellas worth €5.785 million."
In its deferred prosecution agreement with the DOJ, Johnson & Johnson admitted violations in Greece, Poland, and Romania. The plea deal also resolved kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.
In April 2010, a former DePuy executive pleaded guilty in court in London to making £4.5 million in corrupt payments to Greek medical professionals within the state-controlled healthcare system. He was sentenced to 12 months in prison.
Robert John Dougall, 45, was DePuy's marketing director. The company, acquired by Johnson & Johnson in 1999, makes and sells orthopedic devices. The U.K. Serious Fraud Office said from 2002 to 2005, Dougall arranged the payment of commissions to surgeons as an inducement to use DePuy's products. The payments were made through agents and offshore accounts.
The SFO said its investigation began "following a referral by the U.S. Department of Justice in October 2007." Dougall, it said, is the first "co-operating defendant" in a major SFO corruption investigation.
In February 2007, Johnson & Johnson said it "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, the company said Michael J. Dormer, Worldwide Chairman of its Medical Devices & Diagnostics group, had retired. "In a letter to Johnson & Johnson," the company said, "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."
J&J is headquartered in New Jersey and trades on the New York Stock Exchange under the symbol JNJ. It manufactures and sells medical devices, pharmaceuticals, and consumer health care products.
View the DOJ's April 8, 2011 release here.
View the SEC's Litigation Release No. 21922 and Accounting and Auditing Enforcement Release No. 3261 (both dated April 8, 2011) in Securities and Exchange Commission v. Johnson & Johnson, Civil Action No. 1: 11-CV-00686 (D.D.C.) (E.F.H.) (filed April 8, 2011) here.
Download the SEC's civil complaint against Johnson & Johnson here.
View the SFO's April 8, 2011 release here.