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Fresenius Paid $231 Million to Resolve FCPA Case

2019-04-08 16:49 Monday

Fresenius Medical Care, a German healthcare company, has agreed to pay more than $231m to resolve a parallel investigation by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) into its violations of the Foreign Corrupt Practices Act (FCPA).


Fresenius Medical Care disclosed in a Feb. 20 Form 20-F filing that the company had received communications since 2012 alleging it had violated the FCPA and other anti-bribery laws in countries outside the United States. "The board of supervisors, through its audit and corporate governance committee, conducted the investigation with the assistance of the independent counsel." Fresenius said in the financial filing.

Fresenius said the company voluntarily provided assistance and advice to the DOJ and the SEC on the investigation. In announcing a "agreement in principle" with U.S. authorities, Fresenius said the funds amounted to €224 million (U.S. $255m) as of December 31, 2018, taking into account the legal costs, impairments and other costs that had occurred and anticipated.

"Given that these fines have been included in past financial statements on an accrual basis, the decision will have no impact on the company's prospects in 2019 and 2020," the company said after announcing the final settlement.

According to Fresenius's admissions in connection with the resolution, between 2007 and 2016, the company engaged in misconduct including bribery in eight countries in Angola, Saudi Arabia, Morocco, Turkey, Spain, China, Serbia, Bosnia, Mexico and the west African.

Specifically, Fresenius made improper payments through a variety of schemes, including the use of fake consulting contracts, falsified documents and bribery through a third-party intermediary system.

The SEC said: "In some areas, Fresenius has failed to take basic steps to fight corruption, such as providing anti-corruption training or conducting due diligence on his agents. In many cases, senior management is actively involved in corruption schemes and instructs staff to destroy records of wrongdoing.

Charles Cain, Chief of the FCPA Unit, said: "By failing to address the risk of corruption in their growing business, colluded managers were able to engage in bribery schemes which went undetected for more than a decade. As companies grow their businesses, their internal accounting controls and compliance procedures must keep up. "

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