The FBI has launched its own investigation into a handful of the world’s largest medtech companies, stemming from claims of illegal kickbacks being paid to Brazilian government officials over the past 20 years—in return for contracts through the country’s public health programs that administer over 210 million people, according to a report from Reuters.
Brazilian prosecutors said that more than 20 companies—the largest including Johnson & Johnson, Siemens, General Electric and Philips—may have formed a “cartel” to pay bribes and fix prices for a wide range of medical equipment.
Multinational companies prosecuted in Brazil could also find themselves in legal trouble stateside due to the Foreign Corrupt Practices Act, which makes it illegal for companies with securities listed in the U.S. to pay off overseas officials, according to Reuters.
Brazil has been pursuing sweeping anti-corruption campaigns over the past five years, across many sectors of its economy and government, including probes into its state-run oil company Petrobras and construction firm Odebrecht SA.
One Brazilian federal prosecutor told Reuters in an interview that officials from the U.S. Justice Department and the Securities and Exchange Commission were assisting in the medical equipment investigation.
“We are constantly sharing information with the FBI on this (medical equipment) case. They ask for documents and we send them, and they are assisting our investigation in return,” prosecutor Marisa Ferrari told Reuters—adding that her office has also received materials from the DOJ and SEC, and that the investigation was in its early stages.
“Because the Brazilian government’s health budget is so huge, this scheme is truly massive,” Ferrari said. “This first case is just a tiny sliver of what is to come.” Both Philips and J&J confirmed to Reuters that they have received inquiries from U.S. authorities.
Last year, a former regional executive for GE and Philips, Daurio Speranzini Jr., was charged along with 22 others in the first case of the medtech probe. Brazilian prosecutors say the country’s taxpayers lost nearly $150 million U.S. over a decade due to inflated prices and contracts.