The Justice Department has added a year to the probation period for medical device maker Biomet as the department investigates new evidence in the bribery case involving sales in Brazil and Mexico. Probation had been scheduled to end next week.
The Justice Department is investigating new evidence that Biomet may have helped bribe government officials in Mexico and Brazil to facilitate sales of its orthopedic devices, The New York Times reports. The current probation is part of a settlement reached in 2012. Biomet paid $17 million in penalties and entered into a “deferred prosecution agreement” under which criminal charges were withheld if the company complied with probation requirements for three years.
The foreign bribery investigation is a concern in Biomet’s planned $13.35 billion merger with rival device maker Zimmer Holdings. The Times reports that Zimmer could reconsider the deal – which was expected to be completed late this month or early next month – if criminal charges are filed.
An extension of the deferred-prosecution agreement creates the possibility that prosecutors could impose new penalties once the investigation is done. In a recent regulatory filing, Biomet wrote, “The D.O.J. could, among other things, revoke the D.P.A. or prosecute Biomet and/or the involved employees and executives.” The Justice Department said the extension should serve as a warning to the company. Leslie R. Caldwell, head of the Justice Department’s criminal division, said, “The criminal division will not hesitate to tear up a D.P.A. or N.P.A. and file criminal charges where such action is appropriate,” according to the Times.
Lawyers briefed on the matter say the Justice Department is considering a new deferred-prosecution agreement with Biomet, and prosecutors might impose criminal charges on Biomet’s Brazilian and Mexican subsidiaries and any employees involved in the bribery case, according to the Times.
The Times reports that the bribery case began with an email from an anonymous whistleblower who said that distributors hired by Biomet to sell its orthopedic devices were “paying kickbacks” to government doctors.