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FCPA Blog Daily News

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Thursday
Jan172013

Former China compliance officer sues Siemens for retaliation

A compliance officer for Siemens' heathcare business in China said in a federal lawsuit this week that he was fired a week after complaining about the company's risky business practices.

Meng-Lin Liu filed a whistleblower retaliation case against Siemens under the Dodd-Frank Wall Street Reform and Consumer Protection Act in federal court in New York.

He alleged that soon after joining Siemens in March 2008, 'he encountered and confronted a culture of evading, circumventing and violating the anti-corruption internal controls and required by the Foreign Corrupt Practices Act (“FCPA”) and the terms of Siemens’ December 2008 Plea Agreement with the U.S. Department of Justice.'

Siemens' settlement in December 2008 with the DOJ and SEC for $800 million is still the biggest FCPA enforcement action of all time.

Liu lives in Taiwan. His complaint alleged the presence of 'red flags' indicating high risks of corruption in sales of high-end medical imaging equipment in China and North Korea. He was fired in November 2010 after complaining to company executives about the business practices, he alleged in his suit.

Liu continued to complain to company executives after he was fired and in 2011 filed a whistleblower complaint with the SEC, according to his complaint.

He said he 'uncovered incontrovertible evidence that Siemens was submitting intentionally inflated bids for many of the multi-million dollar medical imaging equipment sales it made to public hospitals in China and selling the equipment at substantially lower prices to intermediaries designated by the hospital’s procurement officials. This had all of the hallmarks of a classic bribery or “kickback” scheme and there was no legitimate explanation for the huge price differentials that existed between the prices at which Siemens sold the equipment to these resellers and the far higher prices paid by the end-user public hospitals.'

Liu's suit alleged that Siemens executives ignored warning signs of 'an extremely high probability that: (a) bribes were being paid to Chinese officials in connection with Siemens’ sale of multi-million dollar medical imaging equipment to public hospitals in China and North Korea; and (b) Siemens’ employees were complicit in such a bribery scheme by knowingly submitting inflated bids to Chinese public hospitals at prices that far exceeded the amount that Siemens expected to be paid.'

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