U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20605 / May 30, 2008

Accounting and Auditing Enforcement Release No. 2835 / May 30, 2008

SEC v. Urs Kamber, Stephan Husi and Richard Jon May, Civil Action No. 1:07-CV-01867 (JDB) (D.D.C.)

Former Centerpulse Chief Financial Officer Settles Fraud Charges With SEC

On May 30, 2008, the Securities and Exchange Commission announced that Urs Kamber, the former Chief Financial Officer of Centerpulse Ltd., agreed to settle the Commission's charges against him arising from his alleged involvement in the fraudulent inflation of Centerpulse's income during the third and fourth quarters of 2002. Without admitting or denying the Commission's allegations against him, Kamber has consented to the entry of a final judgment in the Commission's litigation pending in the U.S. District Court for the District of Columbia. The final judgment, which is subject to approval by the Honorable John D. Bates, orders Kamber to pay a $50,000 civil penalty, $65,013 in disgorgement, and $22,824 in prejudgment interest. The final judgment also bars Kamber for five years from acting as an officer or director of any public company that has securities registered with, or is required to file reports with, the Commission, and permanently enjoins him from violating the antifraud, falsification of books and records, and annual certification provisions of the federal securities laws â€" Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13a-14 and 13b2-1 â€" and from aiding and abetting violations of the reporting, books and records and internal controls provisions of the federal securities laws â€" Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) and Exchange Act Rules 12b-20, 13a-1 and 13a-16.

As part of this settlement, and following the entry of the proposed final judgment against him, Kamber (who is a Chartered Accountant in Switzerland) has consented, without admitting or denying the Commission's allegations against him, to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after five years.

The Commission's complaint alleges that Kamber, along with two other former Centerpulse executives, (1) fraudulently inflated Centerpulse's third quarter 2002 income by improperly deferring recognition of a $25 million expense, refusing to write down $3.4 million in costs associated with an impaired asset, and approving $3.6 million in improper reserve adjustments; and (2) fraudulently inflated Centerpulse's fourth quarter and fiscal 2002 income by refusing to increase a reserve to cover at least $18 million in liabilities, improperly using anticipated refund credits to offset another $5 million in expenses, and again refusing to write down $3.4 million in costs associated with an impaired asset.

In related administrative proceedings, Dennis L. Hynson, CPA, Christopher W. Kelford and Paula J. Norbom, CPA, the former vice presidents of finance for Centerpulse's three U.S. divisions, have consented to the entry of cease-and-desist orders relating to improper accounting decisions they made during the third quarter of 2002. See Administrative Proceeding No. 3-13047 / Accounting and Auditing Enforcement Release No. 2832 / Release No. 57889 (May 30, 2008); Administrative Proceeding No. 3-13048 / Accounting and Auditing Enforcement Release No. 2833 / Release No. 57890 (May 30, 2008); and Administrative Proceeding No. 3-13049 / Accounting and Auditing Enforcement Release No. 2834 / Release No. 57891 (May 30, 2008).

The Commission's litigation against former Centerpulse Controller Stephan Husi and the former group vice president of finance, tax counsel and treasurer of Centerpulse USA Holding, Richard May, is ongoing. See Litigation Release No. 20336 (October 17, 2007) / Accounting and Auditing Enforcement Release No. 2741 (October 17, 2007).