In the Matter of Bio‑Rad Laboratories, Inc. (2014)
Case Details
- Case Name
- In the Matter of Bio‑Rad Laboratories, Inc. (2014)
- Countries
- Russia, Thailand, Vietnam
- Foreign Official
- Russian Ministry of Health officials; Government officials in Thailand; Officials at government-owned hospitals and laboratories in Vietnam.
- Date of Conduct
-
2005 to 2010
- Nature of Business
- Bio-Rad Laboratories, Inc. is a Delaware corporation with its headquarters in Hercules, California. Bio-Rad is a life-science research and clinical diagnostics company with operations in the United States and abroad. Bio-Rad’s clinical diagnostics segment sells testing kits and systems to clinical laboratories and hospitals, accounting for the majority of the company’s net sales. Bio-Rad maintains a class of publicly traded securities on the New York Stock Exchange.
- Influence to be Obtained
- According to the SEC’s cease-and-desist order, between 2005 and 2010, Bio-Rad’s French subsidiary (“Bio-Rad SNC”) made payments disguised as commissions to foreign third-party agents with phony Moscow addresses and off-shore bank accounts. The third-party agents entered into various agreements with Bio-Rad SNC to perform services, including acquiring new business, creating and disseminating promotional materials to prospective customers, distributing and installing products and related equipment, and training customers. The SEC noted that none of the third-party agents appear to have had the resources necessary to perform the contracted-for-services and claims that at least a portion of these payments was used to bribe government officials in Russia’s Ministry of Health in exchange for government contracts. Bio-Rad managers are accused of ignoring red flags and affirmatively making efforts to conceal the agents’ work. For instance, one manager communicated with the agents through at least ten different personal e-mail addresses with aliases and referred to the commissions with code words such as “bad debts.”
Apart from the scheme involving the Russian Ministry of Health, between 2005 and 2009, Bio-Rad’s country managers in Vietnam are accused of directing sales representatives to make cash payments to officials at government-owned hospitals and laboratories in exchange for their agreement to buy Bio-Rad products. When Bio-Rad’s regional sale manager discovered the company’s practice in Vietnam in 2006, she raised her concerns with the Vietnam country manager, but allowed the bribes to continue.
Finally, in Thailand, Bio-Rad failed to uncover a pre-existing bribery scheme set in place by Diamed Thailand, a company Bio-Rad acquired in 2007. Between 2007 and 2010, Thai agents received inflated commissions, most of which were paid to Thai government officials in exchange for profitable business contracts. The SEC alleges that Bio-Rad performed very little due diligence on Diamed Thailand prior to the acquisition and, despite discovering the bribery scheme in March 2008, did nothing to stop the conduct.
- Enforcement
- On November 3, 2014, the SEC announced that it settled its charges against Bio-Rad for violations of the FCPA’s anti-bribery and accounting provisions. As part of the settlement, Bio-Rad agreed to pay a total sanction of $40.7 million, consisting of a disgorgement of $35.1 million and prejudgment interest of $5.6 million. As part of a separate DOJ action for FCPA violations associated with the bribes that took place in Russia, Bio-Rad also agreed to pay an additional $14.35 million criminal penalty.
- Amount of the Value
- Approximately $7.5 million.
- Amount of Business Related to Payment
- Approximately $35.1 million.
- Intermediary
- Sales Agent/Consultant.
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 40,700,000
- Reporting Requirements
- Yes (2 Years)
- Total Combined Monetary Sanction
- $ 51,050,000
Defendants
Bio-Rad Laboratories, Inc.
- Citation
- In the Matter of Bio-Rad Labs, Inc., Admin. Proc. File No. 3-16231 (Nov. 3, 2014).
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
