Business Crimes Hotline

According to the Indictment, Orthofix's Mexican subsidiary, Promeca S.A. de C.V., bribed Mexican government officials in the Instituto Mexicano del Seguro Social, a public healthcare and social services institution. In particular, the subsidiary referred to the bribes as “chocolates” in its communications. Rather than confections, the items provided were cash, laptop computers, televisions, and appliances. The value of the “chocolates” totaled around $317,000. Further, the Complaint alleged that the payments were falsely recorded on Orthofix's books as either cash advances or training and promotions expenses, violating Sections 13(b)(2)(A'B) of the Securities Exchange Act.

Of the $7.4 million payment, $5,225,701 is disgorgement and prejudgment interest, with the remaining $2,220,000 portion representing the fine. The settlement did not include appointment of an independent external monitor.

VIRGINIA

DS&S Agrees to $8.82 Million Criminal Penalty

The DOJ's Criminal Division filed a two-count Information on June 18 in the U.S. District Court for the Eastern District of Virginia against Data Systems & Solutions LLC (DS&S or the Company) for conspiring to violate and violating the FCPA. The charges against DS&S, which provides services for nuclear and fossil fuel power plants, including design, installation and maintenance, stemmed from contracts with Ignalia Nuclear Power Plant, a state-owned power plant in Lithuania. To resolve the charges, the Company agreed to pay an $8.82 million penalty and enter into a two-year deferred prosecution agreement.

According to the government, DS&S offered and paid bribes to the Director General of Ignalia and at least four other officials through several methods, including the funding of trips to Florida and Hawaii, above-market payments to a subcontractor owned by a senior Ignalia official, and payments for subcontractor modifications that were never to be performed. In exchange, DS&S received multiple contracts between 1999 and 2004, with a total value exceeding $35 million. The officials influenced the award of contracts by recommending DS&S, providing DS&S with inside information about the contracts and competitors, and by tailoring project designs for DS&S.

The DOJ noted DS&S's “extraordinary” cooperation; specifically, that the Company conducted an “extensive, thorough and swift” internal investigation, provided substantial evidence and information, terminated the responsible employees, and improved company polices and training programs to ensure greater compliance and detection in the future.

Business Crimes Hotline and In the Courts were written by Kirkland & Ellis, LLP, Summer Associate Christian Ascunce.

TEXAS

Orthofix Reaches Combined FCPA Settlement

On July 10, Orthofix International N.V. reached a settlement with the DOJ and the Securities and Exchange Commission (SEC), in connection with Foreign Corrupt Practices Act (FCPA) investigations of the Texas-based orthopedic-products manufacturer. As part of the agreement, which is awaiting court approval, Orthofix agreed to enter into a three-year deferred prosecution agreement with the DOJ, a corresponding civil consent with the SEC, as well as payment of $7.4 million. The settlement resolves FCPA allegations from 2003 until 2010.

According to the Indictment, Orthofix's Mexican subsidiary, Promeca S.A. de C.V., bribed Mexican government officials in the Instituto Mexicano del Seguro Social, a public healthcare and social services institution. In particular, the subsidiary referred to the bribes as “chocolates” in its communications. Rather than confections, the items provided were cash, laptop computers, televisions, and appliances. The value of the “chocolates” totaled around $317,000. Further, the Complaint alleged that the payments were falsely recorded on Orthofix's books as either cash advances or training and promotions expenses, violating Sections 13(b)(2)(A'B) of the Securities Exchange Act.

Of the $7.4 million payment, $5,225,701 is disgorgement and prejudgment interest, with the remaining $2,220,000 portion representing the fine. The settlement did not include appointment of an independent external monitor.

VIRGINIA

DS&S Agrees to $8.82 Million Criminal Penalty

The DOJ's Criminal Division filed a two-count Information on June 18 in the U.S. District Court for the Eastern District of Virginia against Data Systems & Solutions LLC (DS&S or the Company) for conspiring to violate and violating the FCPA. The charges against DS&S, which provides services for nuclear and fossil fuel power plants, including design, installation and maintenance, stemmed from contracts with Ignalia Nuclear Power Plant, a state-owned power plant in Lithuania. To resolve the charges, the Company agreed to pay an $8.82 million penalty and enter into a two-year deferred prosecution agreement.

According to the government, DS&S offered and paid bribes to the Director General of Ignalia and at least four other officials through several methods, including the funding of trips to Florida and Hawaii, above-market payments to a subcontractor owned by a senior Ignalia official, and payments for subcontractor modifications that were never to be performed. In exchange, DS&S received multiple contracts between 1999 and 2004, with a total value exceeding $35 million. The officials influenced the award of contracts by recommending DS&S, providing DS&S with inside information about the contracts and competitors, and by tailoring project designs for DS&S.

The DOJ noted DS&S's “extraordinary” cooperation; specifically, that the Company conducted an “extensive, thorough and swift” internal investigation, provided substantial evidence and information, terminated the responsible employees, and improved company polices and training programs to ensure greater compliance and detection in the future.

Business Crimes Hotline and In the Courts were written by Kirkland & Ellis, LLP, Summer Associate Christian Ascunce.