MercoPress. South Atlantic News Agency

FBI investigating US and EU corporate giants for alleged corruption in medical gear supplies to Brazil

Brazilian authorities say more than 20 companies may have been part of a “cartel” that paid bribes and charged the government inflated prices for medical gear

The U.S. FBI is investigating corporate giants Johnson & Johnson, Siemens AG, General Electric Co and Philips for allegedly paying kickbacks as part of a scheme involving medical equipment sales in Brazil, Brazilian investigators have revealed to Reuters.

Brazilian prosecutors suspect the companies channeled illegal payoffs to government officials to secure contracts with public health programs across the country over the past two decades.

Brazilian authorities say more than 20 companies may have been part of a “cartel” that paid bribes and charged the government inflated prices for medical gear such as magnetic resonance imaging machines and prosthetics.

The four multinational companies, with a combined market capitalization of nearly US$ 600 billion at last week's close, are the largest foreign enterprises to be investigated in an unprecedented anti-corruption push in Brazil in recent years.

Big U.S. and European companies found to have engaged in wrongdoing in Brazil could also face heavy fines and other punishment under the U.S. Foreign Corrupt Practices Act (FCPA).

Since 1977, that law has made it illegal for American citizens, U.S. companies or foreign companies whose securities are listed in the United States to pay foreign officials to win business.

Foreign companies are the latest targets of government corruption probes in Brazil. Over the past five years, prosecutors have uncovered pervasive graft in state institutions and private-sector companies seeking to do business with them.

The sprawling investigations by prosecutors and federal police, including the famed “Car Wash” dragnet centered on Brazil’s state-run oil company Petrobras, have toppled business and political leaders across Latin America.

Authorities say plea-bargain testimonies obtained from suspects alerted them to other possible schemes, including alleged bribes paid by multinationals to obtain public contracts in Brazil.

Brazilian federal prosecutor Marisa Ferrari confirmed in an interview that U.S. authorities from the Justice Department and the Securities and Exchange Commission were assisting in the Brazilian medical equipment investigation she helps lead.

In 2016, U.S. and Brazilian prosecutors jointly negotiated the world’s largest-ever compliance penalty, a US$ 3.5 billion fine against Brazilian construction conglomerate Odebrecht SA for its part in the Car Wash scandal.

“We are constantly sharing information with the FBI on this (medical equipment) case. They ask for documents and we send them, and they are assisting our investigation in return,” Ferrari said. In addition, she said, “We’ve received a lot of material from the Department of Justice and from the SEC.”

She declined to name which companies U.S. law enforcement agencies were investigating. But two Brazilian investigators confirmed to Reuters that Johnson & Johnson, Siemens, GE, and Koninklijke Philips NV were being targeted by the FBI for alleged bribery in Brazil.

Boston-based GE declined to comment on any investigation related to its business in Brazil. It said in an emailed statement, “We are committed to integrity, compliance and the rule of law in Brazil and every other country in which we do business.”

Siemens, said in an emailed statement that the company “is not aware of any FBI investigation of the company related to cartel activity in Brazil.” It said its policy is always to cooperate with law enforcement investigations when they occur.

Amsterdam-based Philips confirmed in an email that it is under investigation in Brazil. In its 2018 annual report, Philips acknowledged that it “has also received inquiries from certain US authorities in respect to this matter.”