Smith & Nephew, the FTSE 100 maker of artificial hips and knees, funnelled £6m through shell companies in the UK to pay bribes to Greek doctors over more than a decade, it was revealed last night.
The company is the latest caught in the wide net of the US Foreign Corrupt Practices Act (FCPA), under which any firm with US operations can be charged for paying bribes to public officials anywhere in the world.
S&N said it would pay penalties of more than $22m (£14m) in settlements with the US Department of Justice and the country's financial regulator, the Securities and Exchange Commission.
According to charges filed in Washington, S&N used a distributor to create a slush fund which made illicit payments to doctors employed by government hospitals or agencies in Greece. The payments were disguised as "marketing services", the US alleged, but no services were actually performed. The doctors were able to reap big payments simply for choosing S&N devices.
"Smith & Nephew's subsidiaries chose a path of corruption rather than fair and honest competition," said Kara Novaco Brockmeyer, the head of FCPA enforcement at the SEC. Yesterday's settlement is another signal of the US authorities' intention to widen the FCPA, which has been on the books since 1977, by defining doctors working for state-run health services in Europe as "foreign officials".
The British drugs giants GlaxoSmithKline and AstraZeneca have both revealed they are under investigation for suspected breaches of the Act, and last year Johnson & Johnson of the US paid $70m to settle claims that it paid European doctors to use its implants.
Medical companies were asked by the SEC and the Justice Department in 2007 to look into possible improper payments to government-employed doctors outside the US. S&N said it reported evidence of improper payments by a distributor in Greece that had been appointed by a subsidiary and was terminated in 2008. "These legacy issues do not reflect Smith & Nephew today," the chief executive Olivier Bohuon said.Reuse content