J&J DISCLOSURE SHOWS WHY FOREIGN UNITS MUST BE MINDFUL OF U.S. ANTI-BRIBERY LAW
Devicemakers need to ensure their subsidiaries working in foreign markets are aware of a U.S. anti-bribery law or -- as Johnson & Johnson (J&J) may find all too soon -- they could face multimillion-dollar fines and possible jail time for their officers.
In a voluntary disclosure to the SEC and the Department of Justice (DOJ) announced Feb. 12, J&J said certain of its subsidiaries might have breached the Foreign Corrupt Practices Act (FCPA). The unnamed subsidiaries are "believed to have made improper payments in connection with the sale of medical devices in two small-market countries," the firm said. The countries were also unnamed.
The FCPA was enacted in 1977 with the primary goal of preventing American corporations from bribing foreign officials.
The law as amended in 1998 offers an exception to restrictions on payments to foreign officials if the purpose of those payments is "to expedite or to secure the performance of a routine government action." Such actions do not include decisions or actions by foreign officials regarding "whether, or on what terms, to award new business or to continue business with a particular party," the law states.