Brazil is a country rich in resources, and driven by a perpetual sense of hopefulness about its future. But it’s also a place plagued by corruption. Most recently, federal prosecutors there are investigating an alleged cartel of U.S. and European companies that supposedly paid Brazilian officials in order to land contracts to put more of their medical devices in Brazil’s public health system.
Brad Brooks, Brazil correspondent for Reuters, says prosecutors allege that Johnson & Johnson, GE, Siemens and Philips “took part in a cartel” for at least the last 20 years.
“That they basically worked with each other, they worked with corrupt middlemen, to pay off government officials here to get their products placed in the Brazilian market,” Brooks says.
If true, these companies would be breaking laws in Brazil and in the U.S. But Brooks says over the last several years that he’s reported on this story, he’s noticed that companies don’t take the laws in Brazil seriously. But what the companies may have underestimated is the extent to which law enforcement in both countries has built a case against them.
“The Brazilians have worked, and continue to work, in lockstep with their American counterparts,” Brooks says. “Together, in the last four years, the Brazilian prosecutors and the Department of Justice in the U.S. – they have reached and negotiated, I believe, it’s three of the world’s five largest fines, compliance fines, for corporations that have been found to have broken the Foreign Corrupt Practices Act.”
While prosecutors are still in the investigation phase, Brooks says they’ve told him they’re confident they have a strong case against the companies, whose total combined market value is about $600 billion.
“They really think that this is massive,” Brooks says.
He says the investigation is part of a larger anti-corruption effort in Brazil.
“Every American and European firm you can think of is down here,” Brooks says. “You don’t want to say that everybody who’s done business here has had to do it dirty, but prosecutors have just always said that anybody who wants to do business in Brazil, they’d have to play by the rules of the game that were set by local politicians and set by local business.”
GE told Brooks that it’s not guilty of wrongdoing; Siemens said the same thing. Johnson & Johnson said it’s not aware of wrongdoing on its part, and Philips says prosecutors are merely investigating the company for wrongdoing during a specific time period.
“They all underscored that they are working with U.S. and Brazilian authorities,” Brooks says.
Written by Caroline Covington.