Here’s the full FCPA disclosure from Orthofix International NV in its Form 10-K filed with the SEC on March 31.
The Lewisville, Texas medical-device maker is investigating potentially improper payments in Brazil.
In July 2012, Orthofix paid $7.4 million to the DOJ and SEC to resolve FCPA offenses in connection with bribes in Mexico.
As part of the settlement, it entered into a three-year deferred prosecution agreement with the DOJ.
The full text of Orthofix’s latest disclosure is below. We’ve made some additional paragraphs for readability.
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On July 10, 2012, we entered into definitive agreements with the U.S. Department of Justice (“DOJ”) and the SEC agreeing to settle our self initiated and self reported internal investigation of our Mexican subsidiary, Promeca S.A. de C.V. (“Promeca”), regarding noncompliance by Promeca with the Foreign Corrupt Practices Act (the “FCPA”).
As part of the settlement, we entered into a three year deferred prosecution agreement (“DPA”) with the DOJ and a consent to final judgment (the “Consent”) with the SEC. The DOJ has agreed not to pursue any criminal charges against us in connection with this matter if we comply with the terms of the DPA. The DPA takes note of our self-reporting of this matter to the DOJ and the SEC, and of remedial measures, including the implementation of an enhanced compliance program, previously undertaken by us.
The DPA and the Consent collectively require, among other things, that with respect to anti-bribery compliance matters we shall continue to cooperate fully with the government in any future matters related to corrupt payments, false books and records or inadequate internal controls. In that regard, we have represented that we have implemented and will continue to implement a compliance and ethics program designed to prevent and detect violations of the FCPA and other applicable anti-corruption laws. We will periodically report to the government during the term of the DPA regarding such remediation and implementation of compliance measures.
As part of the settlement, we also agreed pursuant to the Consent to certain reporting obligations to the SEC regarding the status of our remediation and implementation of compliance measures. In the event that we fail to comply with these obligations, we could be subject to criminal prosecution by the DOJ for the FCPA-related matters we self-reported. Such a criminal prosecution could subject us to penalties that could have a material adverse effect our business, financial condition, results of operations or cash flows.
We are investigating allegations involving potential improper payments with respect to our subsidiary in Brazil.
In August 2013, the Company’s internal legal department was notified of certain allegations involving potential improper payments with respect to our Brazilian subsidiary, Orthofix do Brasil. The Company engaged outside counsel to assist in the review of these matters, focusing on compliance with applicable anti-bribery laws, including the FCPA. This review remains ongoing.
The FCPA and related provisions of law provide for potential criminal and civil sanctions in connection with anti-bribery violations, including criminal fines, civil penalties, disgorgement of past profits and other kinds of remedies. We currently cannot reasonably estimate a possible loss, or range of loss, in connection with this review. In the event that such loss is substantial, it could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Consistent with the provisions of the DPA and the Consent described above, the Company contacted the DOJ and the SEC in August 2013 to voluntarily self-report the Brazil-related allegations, and the Company and its counsel remain in contact with both agencies regarding the status of the review.
In the event that the DOJ and the SEC find that the matters related to our Brazilian subsidiary could give rise to a review of our obligations under the terms of the DPA and/or the Consent, we currently cannot reasonably estimate a possible loss, or range of loss, in connection with that review, including any effects it may have with respect to the DPA and the Consent. In the event such a review were to occur, any losses resulting therefrom, if substantial, could have a material adverse effect our business, financial condition, results of operations or cash flows.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.