The Foreign and Corrupt Practices Act (FCPA) has essentially made it illegal for businesses and individuals to bribe government officials into doing business with them. Part of the FCPA requires that certain types of companies maintain specific accounting controls and keep financial records that correctly reflect any transactions that go on within the company.
These controls would surely show any bribes paid, directly or indirectly, to government officials around the world. This is certainly the case with Fresenius Medical Center, who entered into a non-prosecution agreement with both the United States Department of Justice (DOJ) and the United States Securities and Exchange Commission (SEC) after it was discovered that they had bribed government officials in 13 countries from 2007 to 2016.
The misconduct was discovered and self-reported to the DOJ back in 2012, but Fresenius continued to engage is said bribery until 2016, as well as failed to meet deadlines during this timeframe. Some of the different types of FCPA violations included participation in check-cashing fraud in Saudi Arabia, engaging in false joint business ventures with physicians in Turkey, knowingly paying bribes to government officials in eight different African countries, and several fictitious consulting agreements in Angola and Spain.
Through these ventures and more, Fresenius was able to generate more than $140 million in profits over nearly a decade before coming to an agreement with the DOJ and the SEC. As part of the agreement, Fresenius must pay $147 million to the SEC for interest and disgorgement, and close to $85 million to the DOJ.
In addition to these settlements, Fresenius agreed to implement more extensive internal reporting and accounting controls, and submit to a minimum of two years of compliance monitoring by an independent compliance monitor.
One FCPA whistleblower attorney told us, “The penalties imposed on Fresenius were substantial, but when it comes to a company this large, it doesn’t come close to adequately punishing them. It is quite possible that they will continue to violate FCPA regulations through bribery and other schemes in order to retain business in other countries, or find other ways to cheat the system.”
One has to wonder what the penalties will be should Fresenius be found to be in violation of the FCPA again in the future, but the SEC has the power to freeze business assets and even shut them down in certain situations, should it become necessary.