The US-based Bio-Rad Laboratories, Inc. admitted that its subsidiaries paid kickbacks worth around US$7.5 million to government officials in Russia, Thailand and Vietnam.
The scientific and clinical diagnostic equipment manufacturer has agreed to pay US$55 million to settle criminal and civil charges, the San Jose Mercury News reported Monday, citing a release from the Securities and Exchange Commission.
According to the sources, Bio-Rad subsidiaries in Europe and Asia bribed government officials between 2005 and 2010 with payments to poorly-disguised middlemen.
They said the company paid some $7.5 million in bribes to officials in the three countries from 2005 to 2010 to win business, enabling it to make $35 million in illicit profits, AP reported.
Bio-Rad executives ignored the payments, according to investigators. One Russian middleman apparently used the address of a Russian government building when registering his shell company, according to the SEC.
Also, the payments were made through banks in Latvia and Lithuania, another alleged red flag.
Several "high level" Bio-Rad managers approved the payments, the Justice Department said.
According to SEC, Bio-Rad maintained a sales representative office in Vietnam from 2005-2009. A country manager supervised the Vietnam Office’s sales activities, and was authorized to approve contracts up to $100,000 and sales commissions up to $20,000.
During the time, the country manager authorized the payment of bribes to government officials to obtain their business. At the direction of the country manager, the sales representatives made cash payments to officials at government-owned hospitals and laboratories in exchange for their agreement to buy Bio-Rad’s products.
Between 2005 and the end of 2009, the Vietnam office made improper payments of $2.2 million to agents or distributors, which was funneled to Vietnamese government officials.
Bio-Rad's sales manager agreed to the practice fearing that the company would lose 80 percent of its sales if it stopped paying bribes, according to the SEC complaint.
The San Jose Mercury News reported that the company escaped criminal prosecution under the Foreign Corrupt Practices Act because it disclosed the violations of its subsidiaries when it discovered them in 2010, then assisted with the investigation.