Company to pay over £23 million fine as it settles tender issues with Brazilian authority
Getinge, a global medical technology company, has reached an agreement with the Brazilian Federal Public Prosecutor’s Office (Ministério Público Federal) about a Leniency Agreement mainly related to the manipulation of tender procedures in the country.
According to the company, the cases are mostly attributable to the years of 2004 to 2015 and primarily concern Getinge’s Brazilian subsidiaries, Maquet Cardiopulmonary do Brasil Indústria e Comércio Ltda and Maquet do Brasil Equipamentos Médicos Ltda.
The agreement will see the Swedish manufacturer pay a company fine corresponding to approximately £23.9 million (MSEK 276), which is to be paid during the second half of 2018.
The cost is included in a previous provision made by Getinge in March 2018 related to the Brazilian investigations, with the company confirming that the amount will not affect the operating profit further.
Highlighting that continuing negotiations with other relevant Brazilian authorities are expected to be wrapped up in 2018, Getinge says it cannot rule out that any further agreements with authorities may have material impact on its earnings and financial position, in addition to provisions made.
Founded in Sweden in 1904, Getinge provides medical and healthcare equipment across a number of areas, including acute care and hospitals. Formally, the group was organised into three business areas – Infection Control (trading as Getinge), Extended Care (ArjoHuntleigh) and Medical Systems (Maquet, the world’s largest maker of surgical tables) – before announcing it would become a single brand company under the Getinge name as of March 2017.
What are Leniency Agreements in Brazil
In an attempt to tackle corruption in Brazil, the Brazilian Federal Prosecution Office (MPF) released new guidelines on requirements to be signed with Brazilian companies and foreign companies with headquarters, branches or offices in Brazil for Leniency Agreements in August 2017.
Under the Brazilian Clean Company Act, legal entities are strictly liable for corrupt practices and can incur fines up to 20 percent of a company’s gross revenue in the year prior to the beginning of the investigation, as well as an obligation to publish the decision that applied the fine in a newspaper.
Additionally, an organisation can be barred from involvement in future bids or from entering agreements with public bodies, severely impacting the business of companies reliant on Brazilian public procurement contracts.
In order to protect against such sanctions, companies are given the opportunity to self-disclose corruption and work with authorities under a leniency agreement. The benefits of these agreements include significantly reduced fines and exemption of publishing the decision, as a means of incentivising companies to work with authorities to root out corruption in public bodies.