Siemens and Philips in Brazil allegedly in the sights of the FBI

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Siemens headquarters

The group is suspected, according to Reuters insiders, to have paid bribes in Brazil.

(Photo: AP)

Rio de JaneiroAccording to insiders, Siemens and other major medical device companies have been targeted by the Brazilian authorities and the FBI for alleged bribery of officials. Investigators suspect that manufacturers have bought lucrative government health care contracts, such as magnetic resonance imaging (MRI) or prosthetics, for two decades with kickback payments to state employees, two Reuters officials told the affair. More than 20 companies are said to have been part of the “cartel”, the most prominent of which are Siemens, Philips, Johnson & Johnson and GE.

Because of the bribes, the medical devices have been sold according to testimonies and legal documents up to eight times as expensive as appropriate. Federal prosecutor Marisa Ferrari confirmed in an interview with Reuters that the Brazilian authorities are in exchange with the Federal Bureau of Investigation (FBI), the US Department of Justice and the Securities and Exchange Commission.

She did not name the names of the suspected companies. The investigation was still in the beginning. “Because the budget for the state health care system in Brazil is so big, it's about really big sums of money,” she said. “This first case is just the tip of the iceberg.”

The FBI did not want to confirm that there was an investigation, the SEC did not comment. The US authorities are interested in the cases, because the affected companies in the US threaten severe penalties if they have bribed in Brazil.

Corruption is a big problem in the South American country. In the past five years, prosecutors have discovered numerous bribery systems, the most famous (“Operation car wash”) affected the parastatal oil company Petrobras. Now they are also targeting foreign companies.

The Munich industrial group Siemens explained that he knew nothing of investigations of the FBI against him to arrangements in Brazil. The company works in principle with the authorities in such investigations together. Siemens launched its medical technology division Siemens Healthineers a good year ago.

CEO Joe Kaeser has prescribed the group after a series of scandals a zero tolerance policy in corruption. Of the companies mentioned, only the Dutch medical technology group Philips confirmed investigations in Brazil. In the 2018 Annual Report it was said that inquiries had also been received from US authorities. The US company Johnson & Johnson confirmed requests from the SEC and the Department of Justice in connection with a raid on its branch in Sao Paulo.

In a first case related to the case, GE's former head of South America, Daurio Speranzini, and 22 other defendants were charged last year. The prosecution accuses them of having caused more than 600 million real (€ 134 million) damage to Brazilian taxpayers between 2007 and 2018.

Speranzini is said to have been involved in the agreements during his time as Head of Latin America at Philips Healthcare (from 2004 to the end of 2010). He had been released after informing an internal tipster. A few months later, he joined GE where he left in November 2018. His lawyer said Speranzini was innocent. GE did not want to comment on the circumstances of his departure.

(t) Bribery (t) Bribery (t) Bribery (t) Justice (t) Corruption (t) Crime (t) White-collar Crime (t) Foreign Investment (t) Cartel Industry (t) Fraud (t) Corporate governance (t) Crime (t) FBI (t) General Electric (t) SEC (t) Johnson & Johnson (t) Petroleo Brasileiro (t) Ferrari (t) Healthineers (t) Electrotechnical products (t) Medizintechnik

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