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FCPA Blog Daily News

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Friday
Nov072014

Vietnam puts Bio-Rad purchases under review, asks U.S. to share probe info

Image courtesy of Bio-Rad LaboratoriesVietnam's Ministry of Health Thursday ordered a review of purchases of medical equipment manufactured by Seattle-based Bio-Rad Laboratories, Inc., following the company's $55 million settlement of FCPA offenses, which included allegations of bribery in Vietnam.

Government-controlled hospitals were told to make a list of products bought since 2005 and provide relevant documents of the purchases to the ministry by November 12, according to Thanh Nien News.

A spokesperson for the Ministry of Foreign Affairs, Pham Thu Hang, said Thursday that Vietnam health authorities had also requested information from the United States developed during its investigation concerning any allegations against Vietnam officials.

Bio-Rad agreed Monday to pay a total of $55 million to settle DOJ and SEC allegations that subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand to win business.

The company paid a $14.35 million criminal penalty to resolve DOJ allegations and $40.7 million in disgorgement and prejudgment interest to the SEC.

Bio-Rad employees used local agents in Vietnam and Thailand to funnel bribes from a Singapore subsidiary to foreign officials in exchange for business, the SEC said in its administrative order (pdf).

The company generated about $35 million in profits from 2005 to 2010 by paying $7.5 million in bribes, the SEC said.

Bio-Rad maintained a sales office in Vietnam from 2005-2009. The country manager there was authorized to approve contracts up to $100,000 and sales commissions up to $20,000.

Among the products Bio-Rad manufactures and sells are laboratory diagnostic equipment for diabetes monitoring, blood-virus testing and detection, blood typing, and autoimmune, and genetic disorders testing.

Between 2005 and the end of 2009, the company's Vietnam office made improper payments of $2.2 million to agents or distributors that was passed to Vietnam government officials, the SEC said.

The country manager in Vietnam authorized the payment of cash bribes to government officials to win their business, the SEC said.

In May 2006, the country manager said in an email to the regional sales manager and a finance employee in Singapore that paying third-party fees was "outlawed in the Bio-Rad Business Ethics Policy but that Bio-Rad would lose 80% of its Vietnam sales without continuing the practice," the SEC said.

In the same email, the SEC said, "the country manager proposed a solution that entailed employing a middleman to pay the bribes to Vietnamese government officials as a means of insulating Bio-Rad from liability."

The Foreign Corrupt Practices Act outlaws most direct or indirect payments to foreign officials to win or keep business, including bribes funnelled through intermediaries.

Under the country manager's proposed scheme, the SEC said, "Bio-Rad Singapore would sell Bio-Rad products to a Vietnamese distributor at a deep discount, which the distributor would then resell to government customers at full price, and pass through a portion of it as bribes."

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Reader Comments (1)

In a sea of non-compliance news and commentary, (there aren't enough hours in the day to get through all the news on the subject of corrupt business practices that fills my inbox on a daily basis), the one paragraph in this piece that caught my eye was not the content per se, (sorry, heard it all too often), but rather this:
"The Foreign Corrupt Practices Act outlaws MOST direct or indirect payments to foreign officials to win or keep business, including bribes funnelled through intermediaries."
"Most" meaning the exception to the rule of the FCPA; facilitating payments. This term was invented to circumvent the law so that corrupt and corrosive business as usual tactics could continue legally and does nothing more than promote a double standard across the board. When can a facilitating payment be used in lieu of a bribe and who decides? As an outspoken advocate on behalf of white collar wives I'd like to know how a facilitating payment is going to keep our husbands, fathers, brothers or mothers out of prison. This particular exception to the rule is yet another example that the Emperor indeed, has no clothes.

Great story behind the story which merits revisiting this major exception to the FCPA and how multinational corporations have responded to it in the years since it's implementation.
November 12, 2014 | Unregistered CommenterLisa Lawler
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