Johnson & Johnson Settles with DOJ, SEC, and SFO

08 April 2011 Publication

On April 8, 2011, Johnson & Johnson (J&J), a New Jersey based global pharmaceutical, consumer product, and medical device company, reached a $77 million global settlement with the DOJ, SEC and UK SFO. J&J agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution with the DOJ and more than $48.6 million in disgorgement and prejudgment interest to settle FCPA charges with the SEC. In the United Kingdom, DePuy International Ltd., a UK subsidiary of J&J, settled corruption charges brought by the SFO and was ordered to pay £4.8 million in a civil recovery action.

According to court documents, J&J subsidiaries paid bribes to public doctors in Greece who selected J&J surgical implants, paid bribes to public doctors and hospital administrators in Poland who awarded tenders to J&J, and paid bribes to public doctors in Romania to prescribe J&J pharmaceutical products. J&J also paid kickbacks to Iraq in order to obtain contracts under the United Nations Oil for Food Program. Doctors who ordered or prescribed J&J products were rewarded in a variety of ways, including cash and inappropriate travel. A variety of schemes were used to carry out the bribery, including the use of slush funds, sham civil contracts with doctors, and off-shore companies in the Isle of Man. The SEC’s complaint also alleges that J&J’s agent paid secret kickbacks to Iraq to obtain nineteen Oil for Food contracts.

Both the DOJ and SEC stated that they reduced J&J’s financial penalties in light of the company’s civil penalties in the UK. The DOJ also recognized J&J’s timely voluntary disclosure, thorough self-investigation of the underlying conduct, and extraordinary cooperation of the company. Due to J&J’s pre-existing compliance and ethics programs, extensive remediation, and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the deferred prosecution agreement, J&J was not required to retain a corporate monitor, but it must report to the DOJ on implementation of its remediation and enhanced compliance efforts every six months for the duration of the agreement.

The SFO launched its investigation into the activities of DePuy International Ltd. in October 2007 following a referral from the DOJ. The SFO noted that DePuy International Ltd. co-operated fully with the SFO’s investigation.