As more specialty molecular and genetic laboratories look to European and Asian markets to increase sales of their products, they must also become familiar with the Foreign Corrupt Practices Act (FCPA). Bio-Rad, a clinical diagnostic and life science research company based in California, learned this the hard way. According to the Department of Justice (DOJ) press, Bio-Rad will pay $14.35 million in penalties and $40.7 million in disgorgement and prejudgment interest in connection with the company’s sales in Russia, Thailand, and Vietnam. Bio-Rad entered into a nonprosecution agreement with the DOJ that allowed it to avoid criminal charges. “This action demonstrates the benefits of self-disclosure, cooperation, and subsequent remediation by companies,” said David Johnson, the Federal Bureau of Investigation special agent in charge. What They Did In the admissions in the settlement agreement, Bio-Rad admitted it violated the FCPA by falsifying its books and records and failing to implement adequate internal controls in connection with sales it made in Russia. Bribes were disguised as commissions and other legitimate appearing payments but were designed primarily to influence Russia’s Ministry of Health to help the company win government contracts. Similar secret payments were funneled to government officials in Thailand and Vietnam in […]
As more specialty molecular and genetic laboratories look to European and Asian markets to increase sales of their products, they must also become familiar with the Foreign Corrupt Practices Act (FCPA). Bio-Rad, a clinical diagnostic and life science research company based in California, learned this the hard way.
According to the Department of Justice (DOJ) press, Bio-Rad will pay $14.35 million in penalties and $40.7 million in disgorgement and prejudgment interest in connection with the company’s sales in Russia, Thailand, and Vietnam. Bio-Rad entered into a nonprosecution agreement with the DOJ that allowed it to avoid criminal charges. “This action demonstrates the benefits of self-disclosure, cooperation, and subsequent remediation by companies,” said David Johnson, the Federal Bureau of Investigation special agent in charge.
What They Did
In the admissions in the settlement agreement, Bio-Rad admitted it violated the FCPA by falsifying its books and records and failing to implement adequate internal controls in connection with sales it made in Russia. Bribes were disguised as commissions and other legitimate appearing payments but were designed primarily to influence Russia’s Ministry of Health to help the company win government contracts. Similar secret payments were funneled to government officials in Thailand and Vietnam in return for business. Bio-Rad employees paid $7.5 million in bribes and illegitimate payments over a five-year period and received $35 million in business in return.
Other provisions of the settlement agreement include the company making improvements in its internal controls to prevent future situations such as this, continuing to cooperate with the government by reporting its compliance activities for the next two years, and developing an enhanced compliance program.
Lessons for Laboratories
Laboratories that intend to do business in foreign countries must learn the provisions of the FCPA and include a section in their compliance programs to ensure compliance with its requirements. Labs should train their employees about the FCPA, including enhanced training specifically related to the laws and regulations in the countries they will be operating in. It is also beneficial to specially train the employees who will be interacting directly with their foreign partners concerning the culture of the countries where they will be selling their products.
Takeaway: Many laboratories are looking to foreign markets to increase sales of their tests, but it is essential that they understand the laws and regulations in those countries and the requirements of the FCPA.
