Global medical device manufacturer Zimmer Biomet Holdings, Inc. ("Zimmer Biomet") agreed to enter into a three-year deferred prosecution agreement ("DPA") and pay a $17.4 million fine to settle Department of Justice Foreign Corrupt Practices Act ("FCPA") charges against it. Zimmer Biomet also agreed to pay more than $13 million in disgorgement, interest and penalties to settle SEC civil charges. The company was found to have violated a 2012 agreement settling previous FCPA allegations against Biomet, Inc., which became part of Zimmer Biomet in 2015. As part of the settlements with the DOJ and SEC, Zimmer Biomet also agreed to retain an independent compliance monitor for a period of three years. In related proceedings, JERDS Luxembourg Holding S.ár.l., an indirect subsidiary of Zimmer Biomet, agreed to plead guilty to a one-count criminal information charge of causing Biomet, Inc. to violate the FCPA.

In the resolution documents, Zimmer Biomet admitted that it:

  • made unlawful payments to Mexican customs officials through a third-party customs broker and sub-agents in order to import its unregistered and mislabeled dental products into Mexico;
  • continued to interact and improperly record transactions with a known prohibited Brazilian distributor identified prior to Biomet, Inc.'s 2012 settlements;
  • failed to properly record transactions in Mexico and Brazil in its books and records; and
  • failed to develop and maintain an adequate system of internal accounting controls despite its awareness of the high risk of corruption.

Commentary / James Treanor

The Zimmer Biomet settlements deliver a clear message from regulators that FCPA "recidivists" may face stiff fines and penalties if they fail to live up to their commitments under agreements with the DOJ and the SEC. The $30 million that will be paid by Zimmer Biomet under the current settlements exceeds the approximate $23 million paid by Biomet, Inc. pursuant to its 2012 resolution. Additionally, once the current deferred prosecution agreement expires, the company will have been under a compliance monitor for a total of seven years. According to SEC Enforcement Division FCPA Unit Chief Kara Brockmeyer, "Biomet didn't entirely learn its lesson the first time around." Undoubtedly, other companies under FCPA settlement agreements will be studying hard to avoid the same result.

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