(Reuters) - Zimmer Biomet Holdings Inc (ZBH.N) on Thursday said it would pay $30.5 million to resolve a U.S. foreign bribery investigation that prosecutors said uncovered misconduct related to the medical device maker’s business in Mexico and Brazil.
The deal follows an earlier 2012 settlement with Biomet Inc, which became part of Zimmer in 2015, in which the company entered into a deferred prosecution agreement to resolve an earlier foreign bribery investigation.
The U.S. Department of Justice in June said that Biomet breached the agreement through activity in Brazil and Mexico that it disclosed in 2014, and by failing to maintain a corporate compliance program.
“Zimmer Biomet is now paying the price for disregarding its obligations under the earlier deferred prosecution agreement,” Assistant Attorney General Leslie Caldwell said in a statement.
Under the new settlement, Zimmer Biomet entered into a three-year deferred prosecution agreement and agreed to pay a nearly $17.5 million criminal penalty and retain an independent compliance monitor.
JERDS Luxembourg Holding Sarl, an indirect subsidiary, has also agreed to plead guilty on Friday to causing Biomet to violate provisions of the Foreign Corrupt Practices Act, the Justice Department said.
Meanwhile, the U.S. Securities and Exchange Commission announced a related settlement of more than $13 million with Zimmer.
“We are pleased to have reached this resolution involving legacy Biomet FCPA compliance matters,” said Chad Phipps, Zimmer Biomet’s general counsel.
According the Justice Department, even after the 2012 settlement was reached, Biomet continued to use a third-party distributor in Brazil known to have paid bribes to officials on its behalf.
Prosecutors said Biomet also failed to implement adequate internal controls at its Mexican subsidiary, despite red flags that had made executives and employees aware of suggesting that bribes were being paid.
As a result, Biomet allowed the Mexican subsidiary to pay bribes to Mexican customs officials so that it could import contraband dental implants into Mexico that lacked proper registration or labeling.
Zimmer Biomet in a statement said that the settlement amount had previously been recorded in its financial statements and would not impact its 2017 outlook.
Reporting by Nate Raymond in New York; Editing by Bill Rigby