U.S. Securities and Exchange Commission
Litigation Release 22252 / February 6, 2012
Accounting and Auditing Enforcement Release No. 3363 / February 6, 2012
Securities and Exchange Commission v. Smith & Nephew PLC, Civil Action No. 1: 12-CV-00187 (D.D.C.)(GK) (February, 6, 2012)
SEC CHARGES SMITH & NEPHEW PLC WITH FOREIGN BRIBERY
The Securities and Exchange Commission today announced a settlement with Smith & Nephew PLC to resolve SEC charges that the global medical device company violated the Foreign Corrupt Practices Act (FCPA) when its subsidiaries bribed public doctors in Greece for more than a decade. Smith & Nephew PLC, headquartered in London, England, is a global medical device company with operations around the world.
The SEC alleges that, from 1997 to June 2008, two of Smith &Nephew PLC's subsidiaries, including its U.S. subsidiary, Smith & Nephew Inc., used a distributor to create a slush fund to make illicit payments to public doctors employed by government hospitals or agencies in Greece. Smith &Nephew PLC agreed to settle the SEC's charges by paying more than $5.4 million in disgorgement and prejudgment interest. Smith &Nephew PLC's U.S. subsidiary, Smith & Nephew Inc., agreed to pay a $16.8 million fine to settle parallel criminal charges announced by the U.S. Department of Justice today.
The SEC's complaint alleges that, starting in 1997, Smith &Nephew PLC's subsidiaries developed a scheme to create an offshore fund to pay Greek public doctors to purchase products from two Smith &Nephew PLC subsidiaries, Smith & Nephew Inc. and Smith & Nephew GmbH. According to the complaint, Smith &Nephew PLC's subsidiaries made payments to a total of three shell entities in the United Kingdom controlled by the distributor that were used to pay bribes. The complaint alleges that on paper, it appeared as if Smith &Nephew PLC's subsidiaries were paying for marketing services, but no services were actually performed. The complaint also alleges that Smith &Nephew PLC failed to act on numerous red flags of bribery and that employees at Smith &Nephew PLC and its subsidiaries were aware of the payments.
Smith &Nephew PLC has consented, without admitting or denying the SEC's allegations, to the entry of a court order permanently enjoining it from future violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934; ordering it to pay $4,028,000 in disgorgement and $1,398,799 in prejudgment interest; and ordering it to retain an independent compliance monitor for a period of eighteen months to review its FCPA compliance program.
The SEC acknowledges the assistance of the U.S. Department of Justice, Fraud Section and the Federal Bureau of Investigation. The SEC's investigation into the medical device industry is continuing.