Orthofix International, a maker of orthopedic products, announced this week in a Form 10-K filing with the Securities and Exchange Commission that it has launched an internal investigation into potential violations of the Foreign Corrupt Practices Act with respect to its subsidiary in Brazil.

In August 2013, the company's internal legal department was notified of allegations involving potential improper payments with respect to its 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 company stated.

In addition to the ongoing FCPA probe, Orthofix is still under a three-year deferred prosecution agreement that it entered into with the Department of Justice in 2012, and a consent-to-final judgment with the SEC, in connection with a “self-initiated and self-reported review of FCPA-related matters involving the company's Mexican subsidiary, Promeca,” the company stated.

Consistent with provisions of the DPA and the consent order, Orthofix said it voluntarily self-reported the Brazil-related allegations to the Justice Department and SEC, “and the company and its counsel remain in contact with both agencies regarding the status of the review.”

With respect to anti-bribery compliance matters, the DPA and the consent order collectively require, among other things, that Orthofix:

Cooperate fully with the government in matters related to corrupt payments, false books and records or inadequate internal controls;

Continue to implement a compliance and ethics program designed to prevent and detect violations of the FCPA and other applicable anti-corruption laws; and

Provide certain periodic reporting to the government. 

In the event that the Justice Department and the SEC find that matters related to the Brazilian subsidiary could give rise to a review of our obligations under the terms of the DPA or the consent order, the company stated, “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 Consent."

Topics