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TRANSCRIPT
SAMED
Annual Conference 2014
Anti-Bribery and Corruption
Presentation
KPMG Forensic
29 May, 2014
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Overview of Presentation
An Evolving Response to a Global Challenge
FCPA Enforcement Trends
Medical Devices Industry Sweep
Case Study
- Bribery Scheme
- Penalties
Risk Factors for Medical Devices Industry
Compliance Strategies
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
An Evolving Response to a Global Challenge
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Fines and Penalties for Violations of the FCPA
Company Country Fine / Penalties Year
1 Siemens Germany $800 Million 2008
2 KBR / Halliburton USA $579 Million 2009
3 BAE UK $400 Million 2010
4 Total S.A. France $398 Million 2013
5 Alcoa World Alumina USA $384 Million 2014
6 Snamprogetti Netherlands / ENI S.P.A Netherlands /
Italy
$365 Million 2010
7 Technip S.A. France $338 Million 2010
8 JGC Corporation Japan $219 Million 2011
9 Daimler AG Germany $185 Million 2010
10 Weatherford International Switzerland $137 Million 2013
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Medical Devices – Industry Sweep
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Medical Devices ABC Case Study: Smith & Nephew- Scheme
Between 1998-2008, S&N allegedly paid $9.4 m “cash incentives”
via distributors to publicly employed Greek healthcare providers
------------------------------------------------------- S&N usually sold products at a discount and distributor re-sells at
‘list price’
------------------------------------------------------- S&N altered the standard agreement and sold products at ‘list
price’ to distributors and paid the discount via S&N Gmbh
(Germany) and other subsidiaries to three off-shore companies
controlled by distributor
S&N and S&N Gmbh recorded payments to offshore companies
as “marketing services”
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Medical Devices ABC Case Study: Smith & Nephew- Penalties
$16.8 Million
Criminal Fine
$5.4 Million
Disgorgement of Profits
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Risk Factors for Medical Devices Industry
“Foreign official” includes doctors, nurses and other professionals employed by public
hospitals and other government organizations
International nature of the industry
Reliance on third party intermediaries – agents and distributors and liability for their
actions
Payment of “anything of value” includes (but not restricted to) travel, meals, lodging and
attendance at medical conferences or education creates significant FCPA risks
“Nearly every aspect of … approval,
manufacture, import, export, pricing, sale, and
marketing…may involve a ‘foreign official’ within
the meaning of FCPA” US official
© 2014 KPMG Services (Pty) Limited, the South African member firm of KPMG International, a Swiss cooperative. All rights reserved.
Compliance Strategies – KPMG Framework
Roy Muller
Director:
Forensic – Anti-Bribery and Corruption
Cell: +27 83 397 3319
Email: [email protected]
Srinivas Vishnubhatla
Associate Director:
Forensic – Anti-Bribery and Corruption
Cell: +27 82 719 3172
Email: [email protected]