Saturday, April 09, 2011

The greed

It's not all "no more tears" at Johnson & Johnson.

johnson & johnson

Though their website brags about the work they're doing on recycling, their donation to tsunami relief and more, they'll need more than detangler spray to escape the latest image problem. Joshua Gallu and Alex Nussbaum (Bloomberg News) report, "Johnson & Johnson (JNJ), the world’s second-biggest seller of medical products, will pay $70 million after admitting that the company bribed doctors in Europe and paid kickbacks in Iraq to win contracts and sell drugs and artificial joints." Halah Touryalai (Forbes' Working Capital) observes, "In typical settlement fashion, Johnson & Johnson did not admit or deny wrongdoing but forked over $70 million between the SEC and the DOJ." From the Securities and Exchange Commission press release on the charges:

"The message in this and the SEC’s other FCPA cases is plain – any competitive advantage gained through corruption is a mirage," said Robert Khuzami, Director of the SEC's Division of Enforcement. "J&J chose profit margins over compliance with the law by acquiring a private company for the purpose of paying bribes, and using sham contracts, off-shore companies, and slush funds to cover its tracks."
Cheryl J. Scarboro, Chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit, added, "Bribes to public doctors can have a detrimental effect on the public health care systems that potentially pay more for products procured through greed and corruption."
According to the SEC’s complaint filed in federal court in the District of Columbia, public doctors and administrators in Greece, Poland, and Romania who ordered or prescribed J&J products were rewarded in a variety of ways, including with cash and inappropriate travel. J&J subsidiaries, employees and agents used slush funds, sham civil contracts with doctors, and off-shore companies in the Isle of Man to carry out the bribery.

Peter Loftus and Jessica Holzer (Dow Jones Newswire) remind, "The news is the latest black eye for J&J, which has been grappling with a series of product recalls because of manufacturing-quality lapses, as well as government investigations of its U.S. marketing practices. J&J recently agreed to heightened government oversight of manufacturing in its McNeil Consumer Healthcare unit, the source of recalls of millions of bottles of over-the-counter medicines including Tylenol since 2009."

In other corruption news, the Justice Dept announced Friday that a one-time US Baghdad Embassy employee who stole close to $250,000 had received a prison sentence:

WASHINGTON – A former employee of the U.S. Embassy in Baghdad, Iraq, was sentenced today in U.S. District Court in Alexandria, Va., to 42 months in prison for stealing nearly $250,000 intended for the payment of shipping and customs services for the embassy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.

Osama Esam Saleem Ayesh, 36, was also ordered to pay $243,416 in restitution and a $5,000 fine, as well as to serve three years of supervised release following his prison term. A federal jury convicted Ayesh on two counts of theft of public money and one count of engaging in acts affecting a personal financial interest. Ayesh was arrested at Dulles International Airport on Aug. 16, 2010, and indicted on Oct. 15, 2010, on the charges for which he was convicted.

Ayesh, a resident of Jordan, was hired by the Department of State as a shipping and customs supervisor at the embassy in Baghdad, who oversaw the shipments of personal property of embassy officials and personnel in Iraq. His duties required that he maintain close contact with local Iraqi companies and vendors with expertise in clearing goods through Iraqi customs. As a State Department employee, Ayesh was aware that he would be subject to the conflict of interest laws of the United States that prohibit government employees from using their position for personal profit.

According to court records, Ayesh used his State Department computer to create a phony e-mail account in the name of a real Iraqi contractor and used that e-mail account to impersonate the contractor in communications with embassy procurement officials. He also established a bank account in Jordan under his wife’s name to further his criminal scheme and falsified wire transfer instructions that directed U.S. government electronic funds transfers to that account.

Court records and evidence at trial showed that Ayesh was personally involved in establishing and operating blanket purchase agreements for the provision of customs clearance and delivery services to the U.S. Embassy in Baghdad. From November 2008 to June 2010, Ayesh submitted false invoices in the name of an Iraqi contractor – which Ayesh fabricated on blank stationery he kept in his embassy apartment – and caused the U.S. Department of State to wire $243,416 to his wife’s account in Jordan.

This case was prosecuted by David Laufman of the Criminal Division’s Fraud Section, who is on detail to the Department of Justice from the Special Inspector General for Iraq Reconstruction, and Assistant U.S. Attorney Thomas McQuillan of the Eastern District of Virginia. The Criminal Division’s Office of International Affairs provided assistance in this matter. The case was investigated by special agents of the State Department’s Office of Inspector General and the FBI’s Washington Field Office.

Cedric and Wally's sites updated last night:

And the rest? Friday morning, most of the Thursday night posts were not showing up so I'm swiping from Cedric and Wally's joint-post to grab Thursday and Friday night:

"Diets in the Kitchen"
"Stop-loss money"
"He makes sense"
"The mixed one has betrayed us"
"Her Iraq talk"
"Equality is impossible for Rehm"
"true nature"
"The agreement?"
"Michael Ratner on impeachment"
"Take back your power"
"Bob II"
"Who gets the blame"
"Object of My Affection"
"Thoughts on WSWS and Barack"
"Bully Boy 'lets' David Petraeus speak to Congress"
"The wars"
"Libyan War leads to more"
"Who will love him now?"

David Bacon's latest book is Illegal People -- How Globalization Creates Migration and Criminalizes Immigrants (Beacon Press) which won the CLR James Award. And we'll close with this from Bacon's "Bay Area Workers March to Support Wisconsin Labor" (Political Affairs):

The e-mail address for this site is

thomas friedman is a great man

oh boy it never ends