Russian Bribes Cost U.S. Firm Mightily

(CN) - California-based Bio-Rad Laboratories will pay $55 million to settle federal claims that it paid bribes to get contracts in Russia, Thailand and Vietnam.

The Hercules, Calif.-based medical diagnostics firm agreed to pay $40.7 million to settle an SEC complaint, and $14.4 million to settle parallel claims from the Department of Justice.

The Justice Department lawsuit, under the Foreign Corrupt Practices Act, involved sales only in Russia.

The SEC claimed that Bio-Rad lacked sufficient controls to prevent or even detect $7.5 million in bribes paid to officials in Russia, Vietnam and Thailand to secure lucrative government contracts.

Bio-Rad made $35 million in illicit profits from this, the SEC said.

Bio-Rad disguised the bribes as commissions to foreign agents, with phony Moscow addresses and offshore bank accounts, the SEC said. But the agents had no employees and no capacity to perform the services: they actually were paid to influence Russia's Ministry of Health, according to the SEC.

Bio-Rad managers ignored red flags that its Russian agents were bribing government officials, and condoned an atmosphere of secrecy, the SEC said.

It said Bio-Rad managers communicated through at least 10 e-mail addresses with aliases, and referred to the "commissions" with code words such as "bad debts."

Bio-Rad also used local intermediaries in Vietnam and Thailand to funnel bribes to foreign officials there, the SEC said. Its Singapore subsidiary sold products at a deep discount to Vietnamese distributors, who passed through a portion of it as bribes.

The Justice Department claims that Bio-Rad SNC, a French subsidiary, paid cutout companies commissions of 15 to 30 percent, purportedly for help in securing contracts with the Russian government.

High-level Bio-Rad managers approved the payments, which were falsely recorded on Bio-Rad's books, knowing that the cutouts were paid significantly above-market commissions for little or no services, the Justice Department said.

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