Brazil Police: Jailed Executive Involved in Medical Cartel

Brazilian authorities arrested last week Daurio Speranzini Jr. and 19 others for involvement in an international health-care cartel, Reuters reported Wednesday.

640px-Rio De Janeiro - Rafael Defavari copyA witness testified that Daurio Speranzini Jr. wont contracts from the National Traumatology Institute to sell medical equipment at inflated prices. (Source: Rafael Defavari, CC BY 4.0)The arrests are the latest chapter in an ongoing investigation into an extensive corruption scheme involving former Rio state governor Sergio Cabral, who is currently in prison for defrauding the state of US$100 million.

A 362-page court document examined by Reuters indicates that prosecutors believe the CEO of  General Electric Co.’s Latin America division, along with several multinational firms administered bribes through local medical supply firms with connections to political figures in Brazil.

The local firm in question, Oscar Iskin, passed bribes to government officials to ensure fixed prices for medical equipment and products.

A lawyer for Oscar Iskin’s CEO has denied the allegations.

Among the international corporations listed in the documents are Johnson & Johnson, and Koninklijke Philips NV, whose Brazilian offices were among the 42 sites raided in last week’s arrests.

The court documents cite “robust evidence” that Speranzini, former head of Koninklijke Philips NV’s Latin America division, “participated in the crimes of corruption, fraudulent bidding, and forming a criminal organization,” adding, “there is also evidence that he attempted to cover-up the crimes so that regulating bodies would not find out.”

The document outlines Speranzini’s role as the head of Koninklijke Philips NV’s healthcare venture in Latin America from 2004 until 2010, when a whistleblower notified it’s compliance office of fraudulent activity. Speranzini was fired following an internal investigation before going on to become CEO of GE’s Healthcare division two months later.

According to prosecutors, plea bargain testimony from Cesar Romero, former No. 2 official at the Rio de Janeiro state health secretariat, states that Speranzini won contracts from the National Traumatology Institute to provide medical equipment at inflated prices while working for Philips and GE.

No lawyers working for Speranzini could be identified or contacted for a statement.