In a May 17, 2019 press report that has been widely distributed in Brazil and the United States, Brazilian Federal Prosecutor Marisa Ferrari confirmed that the U.S. Federal Bureau of Investigation (FBI), the U.S. Department of Justice (DOJ), and the U.S. Securities and Exchange Commission (SEC) are cooperating with Brazilian Federal Prosecutors in investigations involving allegations that multiple companies paid kickbacks related to the sale of medical equipment in Brazil.[1] Noting that Brazilian authorities were in “permanent contact” with their U.S. counterparts, Prosecutor Ferrari stated that the Brazilian Federal Prosecutors are providing information to the FBI regarding the investigation and that they have received extensive documentation from DOJ and the SEC in support of their efforts. This recent report follows the mid-2018 arrests of two dozen individuals and subsequent criminal charges by Brazilian authorities relating to corruption allegations in the medical device sector and the recent testimony of convicted former Rio de Janeiro governor Sergio Cabral relating to the payment of millions of Brazilian Reais in bribes in exchange for public health contracts in Rio de Janeiro.[2]
 
These investigations—which include “Operation Weak Flesh” and “Operation Resonance,” as these investigations are known in Brazil—are yet another example of U.S. enforcement authorities coordinating with their overseas counterparts, including in investigations of violations of the U.S. Foreign Corrupt Practices Act (FCPA). Notably, it was a U.S.-Brazilian collaboration that led in 2016 to the largest bribery penalty to date—$3.5 billion, against the Brazilian construction conglomerate Odebrecht SA. 
 
Companies conducting business in Brazil in the medical device sector, including through either a direct sales or a distributor model, would be well-advised to consider conducting a review of their business to assess any potential risk. Such a review could include, among other aspects :

• An analysis of sales with public entities;
• Review of public tender procedures to ensure that no coordination exists between the companies and their  channel partners with regard to participation in public tenders;
• The identification and review of any payments or benefits provided to employees if public entities, including payments made through third parties;
• A review of any interactions with industry peers on matters involving pricing;
• A review of vendor master lists for any distributors known to be involved in this investigation; and 
• Confirmation that appropriate risk-based due diligence is being conducted of third parties with whom the company is doing business.

More broadly, this reporting confirms an ongoing trend of cross-border cooperation among enforcement authorities, across various industry sectors. In light of this trend, and consistent with guidance from regulators such as DOJ,[3] multinational companies must work to ensure that their corporate compliance programs are truly effective—both to identify compliance issues and to meet the expectations of regulators should those compliance issues come to light. In practice, that requires a compliance program that is fully implemented, aligns with the risk profile of the company’s business, evolves through ongoing testing and refinement, and ultimately succeeds in identifying and enabling the remediation of compliance issues.[4] Such steps are particularly important given the continuing trend—including, as this recent report illustrates, in the health care sector—of international coordination and information-sharing among enforcement authorities.
 
 

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