December 11, 2014 — The Foreign Corrupt Practices Act (FCPA) is a powerful weapon to stop corporations from attempting to win or retain business abroad by making bribe payments to or bestowing lavish gifts on foreign government officials or their family members. Aimed at the problem of foreign bribery, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 allows for substantial financial rewards to insider informants who blow the whistle on FCPA violations.
California Life Science Research Company Failed To Develop Or Implement Adequate Controls To Prevent Foreign Bribery
A California clinical diagnostic and life science research company has been charged with FCPA violations in connection with improper payments by subsidiaries to foreign officials in Russia, Thailand and Vietnam in an effort to obtain contracts in those countries.
In Russia, Bio-Rad Laboratories deposited bribes into off-shore bank accounts held by foreign agents with sham Moscow addresses. The agents, who lacked even the capability to perform the services for which they were purportedly hired, bribed government officials inside Russia’s Ministry of Health to persuade them to award lucrative contracts to Bio-Rad.
In Thailand and Vietnam, Bio-Rad employees relied on local intermediaries to pay bribes to government officials in exchange for business. In Thailand, Bio-Rad acquired a business that had in place a scheme to pay inflated commissions to Thai agents who in turn used a portion of the commissions to bribe Thai officials. Bio-Rad’s subsidiary in Singapore sold deeply discounted merchandise to distributors in Vietnam who used their cost-savings to make the bribe payments.
The SEC alleged that Bio-Rad failed to implement adequate internal controls to prevent or detect around $7.5 million in bribe payments made in the three countries over a five-year period. On its books, Bio-Rad improperly recorded the bribes as legitimate advertising expenses or as commissions and training fees. As a result of the improper payments, Bio-Rad took in $35 million in illicit profits.
Bio-Rad will pay $55 million to resolve the charges.
Whistleblowers Notify Government About FCPA Violations
While Waters & Kraus is not handling this particular FCPA case, we are representing whistleblowers in similar matters involving foreign bribery violations. If you have comparable claims against your employer or another business, email us or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can collaborate with the government to redress illegal foreign bribery schemes. Our experienced lawyers, such as Michael Armitage and Louisa Kirakosian in the firm’s Southern California office, are working to level the playing field in international business operations.