The U.S. Securities and Exchange Commission and the U.S. Department of Justice have charged Bio-Rad Laboratories Inc., a life science research company, with foreign bribery charges as part of a $55 million settlement to resolve probes centering on $7.5 million in improper payments to Russian, Vietnamese and Thai officials to win business. The California-based company, which self-reported its misconduct and cooperated with the SEC and the Justice Department, also entered into a nonprosecution agreement to resolve potential criminal liability. The SEC’s Andrew J. Ceresney said in a statement:
Bio-Rad Laboratories failed to detect a bribery scheme and did not properly address red flags that such a scheme was underway. This enforcement action, which reflects credit for Bio-Rad’s cooperation in our investigation, reiterates the importance of all companies ensuring they have the proper internal controls.
The money represents $40.7 million in disgorgement and interest paid to the SEC and a $14.35 million criminal fine paid to the government. According to the SEC, the company made excessive payments disguised as commissions to foreign agents – who had had no employees and no capacity to perform the purported services for Bio-Rad – and who had phony Moscow addresses and off-shore bank accounts. Bio-Rad managers repeatedly ignored various red flags indicating that the Russian agents were likely bribing government officials, and they condoned an atmosphere of secrecy, according to the SEC.
The SEC said that in Vietnam and Thailand Bio-Rad employees used local intermediaries to funnel bribes through to foreign officials in exchange for business. The agency said further that Bio-Rad also acquired a company in Thailand and failed to uncover a pre-existing bribery scheme in which Thai agents received inflated commissions that were partially used for improper payments.
The company is charged with violating the Foreign Corrupt Practices Act (FCPA) and must report its FCPA compliance efforts to the SEC for a period of two years. Bio-Rad CEO Norman Schwartz said in a statement the company has taken “strong, decisive action to end the problematic practices and prevent anything like this from happening in the future. According to the statement, that includes terminating involved employees and committing substantial resources to strengthening the compliance functions. Bio-Rad netted $77.8 million in 2013 on gross revenues of $2.1 billion.
In March of 2013, the company said it had “identified conduct in certain of our overseas operations that may have violated the anti-bribery provisions of the United States Foreign Corrupt Practices Act.” At the time, it estimated the company would take a $35 million hit. The company also faced private litigation in California related to foreign bribery and its internal controls.
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