Olympus pays DOJ $22.8 million to resolve Latin America FCPA offenses
Tuesday, March 1, 2016 at 12:18PM
Richard L. Cassin in Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Mexico, Olypmics

Olympus Corporation of the Americas said Tuesday it settled two separate U.S. investigations, including one involving Foreign Corrupt Practices Act offenses.

The company's Latin America unit agreed to pay $22.8 million to resolve criminal allegations that it violated the FCPA.

Olympus Latin America, Inc. also entered into a three-year deferred prosecution agreement with enhanced compliance obligations.

A compliance monitor will "assess and monitor" Olympus Corporation of the Americas's FCPA compliance program.

Olympus is the biggest distributor of endoscopes and related medical equipment in the United States and sells the devices world wide.

Olympus Latin America provided "cash, money transfers, personal or non-Olympus medical education travel, free or heavily discounted equipment, and other things of value" to doctors working at government hospitals and clinics, according to the deferred prosecution agreement.

The offenses occurred in Brazil, Bolivia, Chile, Colombia, Argentina, Mexico, and Costa Rica.

From 2006 to 2011, the unlawful payments totalled about $3 million, the DOJ said. The payments resulted in profits for Olympus Latin America of more than $7.5 million.

Company executives kept a spread sheet of the illegal payments and linked them to sales and revenues. They also instructed other employees how to keep the payments secret.

In the deferred prosecution agreement (available here as pdf), the DOJ said Olympus "did not timely, voluntarily disclose the FCPA violations at issue."

But Olympus ultimately cooperated and received sentencing credit for "conducting an extensive internal investigation, translating documents as necessary, and collecting, analyzing, and organizing voluminous evidence and information," according to the DPA.

Olympus "ended its involvement with numerous responsible parties, including employees and third-party distributor relationships in Latin America," the DPA said. And it enhanced its due diligence for third-party agents and consultants.

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Separately, Olympus Corporation of the Americas or OCA agreed to pay $612 million plus interest to resolve parallel criminal and civil investigations into alleged violations of the Anti-Kickback Statute and the False Claims Act.

The second settlement resolved allegations by the U.S. Attorney's Office for the District of New Jersey concerning "interactions and financial relationships" with U.S. medical business customers and doctors who use Olympus products.

OCA agreed to pay a $312.4 million criminal penalty under the Anti- Kickback Statute and an additional $310.8 million to settle civil state and federal charges under the False Claims Act. 

The civil settlement resolved a lawsuit filed by John Slowik, the former chief compliance officer of OCA.

Slowik will collect $51 million from Tuesday's settlement -- $44 million from the federal share and $7 million from the state share of the civil settlement amount.

He filed suit in the District of New Jersey under the whistleblower provisions of the federal False Claims Act and various state versions of the law.

The FCA permits private parties to sue for false claims against government entities and to share in any recovery. 

The DOJ said in connection with the Anti-Kickback Statute case,

The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes. 

The kickbacks helped OCA win more than $600 million in U.S. sales and earn profits of more than $230 million, the DOJ said.

As part of the settlement, OCA entered into a separate three-year deferred prosecution agreement and a five-year corporate integrity agreement that requires appointment of a compliance monitor.

The monitor will also perform duties under the FCPA-related DPA.

The DOJ said the monitor is Larry Mackey, a former federal prosecutor "best known for trying the Oklahoma City bombing cases," the DOJ said.

His three-year term can be extended for two more years if Olympus violates the DPA.

The DOJ's March 1, 2016 release is here.

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Olympus Corporation of the Americas is a wholly owned subsidiary of Olympus Corporation in Tokyo, Japan.

OCA is headquartered in Center Valley, Pennsylvania and has about 5,000 employees in North and South America.

OCA President and CEO Nacho Abia said Tuesday, "Olympus leadership acknowledges the Company's responsibility for the past conduct, which does not represent the values of Olympus or its employees."

"The Company has implemented and will continue to enhance its robust compliance program," he said.

Olympus Corporation in Tokyo first acknowledged the investigations publicly a year ago, OCA said, and last month announced the booking of reserves against the potential settlement amounts. 

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

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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