March 29, 2019

German dialysis equipment provider agrees to pay over $231 million to resolve FCPA allegations

Fresenius Medical Care AG & Co. KGaA, a dialysis products and services provider based in Bad Homburg, Germany, has entered into a three-year non-prosecution agreement with the United States Department of Justice to resolve allegations that the company willfully and knowingly violated the Foreign Corrupt Practices Act, 15 USC §§ 78dd-1, et seq., between 2007 and 2016, in connection with allowing or facilitating improper payments to government officials in Angola, Saudi Arabia, Morocco, Spain, Turkey, Benin, Burkina Faso, Cameroon, Ivory Coast, Niger, Gabon, Chad and Senegal.  According to the DOJ, in addition to the corrupt conduct, the FCPA violations included failure to implement reasonable internal accounting controls, and failure to maintain books and records that accurately and fairly reflect the company’s transactions.  According to the government, Fresenius benefitted by over $135 million as a result of the improper payments.  Pursuant to the NPA, Fresenius will pay a criminal penalty of $84,715,273, and will engage an independent compliance monitor for a two-year period.  

In a parallel action, the Securities and Exchange Commission has issued an order instituting cease-and-desist proceedings pursuant to Section 21C of the Securities Exchange Act of 1934.  Fresenius has agreed to pay disgorgement of profits and prejudgment interest of $147 million to the SEC, bringing the total amount to be paid by the company to $231,715,273.

According to the NPA, the Department of Justice gave Fresenius credit for voluntarily and timely disclosing the conduct at issue, and partial credit for cooperating with the DOJ investigation.  The company also received credit for taking remedial measures, including terminating the employment of at least ten individuals implicated in the scheme, enhancing the company’s compliance programs, and terminating business relationships with the third-party agents and distributors who participated in the misconduct. 

DOJ press release | SEC press release

Non-prosecution agreement

Cease-and-desist order