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GE's Latin America CEO Arrested in Healthcare System Fraud Investigation in Rio

07/05/2018 - 11h27

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ITALO NOGUEIRA
LUCAS VETTORAZZO
NICOLA PAMPLONA
RIO DE JANEIRO

GE's Latin America CEO, Daurio Speranzini Junior, was taken into custody temporarily on Wednesday (the 4th) as part of Operation Resonance, which is investigating fraud in public tenders since 1996 at the Rio de Janeiro Health Secretariat and at INTO (National Traumatology Institute).

The request for an arrest warrant specified facts related to the period in which he Speranzini was CEO of Philips Medical corporation in Brazil, up until 2010, and a case which took place after he took over the position of CEO at GE.

A temporary arrest warrant for Frederik Knudsen, another executive at Philips in Brazil at the time, has also been issued.

Foto: Aloisio Mauricio /Fotoarena/Folhapress
GE's Latin America CEO, Daurio Speranzini Junior
GE's Latin America CEO, Daurio Speranzini Junior

The Federal Justice Department had also sought a search and seizure warrant for the headquarters of Johnson & Johnson, but this wasn't authorized.

The investigation is a consequence and further development of the Exposed Invoice Operation (Operação Fatura Exposta), which resulted in the arrest of former Health Secretary Sérgio Côrtes in 2017. The primary target of the operation was Miguel Iskin, identified as the organizer of a medical equipment cartel that supplied INTO and the Secretariat.

Iskin charged a "fee" of 13% of the value of contracts. The commission demanded from international corporations was as high as 40%.

The Federal Justice Department has identified Albert Holzhacker, former a partner at Dixtal corporation, as being responsible for "disseminating criminal practices" at Philips. He is also being held under arrest.

Johnson & Johnson is alleged to have participated in the cartel until 2014.

The cartel's structure was described in detail by two companies as part of a leniency agreement with CADE (the Economic Defense Administrative Council). 70 public tenders were identified as having been affected by the cartel, with 37 different companies involved.

The estimate (considered conservative) regarding damage to public coffers is as high as R$ 600 million (US$ 154 million)

GE itself declared that it isn't a target of the investigation and is cooperating with investigators. Philips said that it hasn't had access to the proceedings or documents but that it is cooperating with authorities. Johnson & Johnson Medical Devices Brazil declared that it complies rigorously with Brazilian laws and that it is in full cooperation with authorities.

Daurio Speranzini Junior's legal counsel didn't return calls made by this reporter.

Translated by LLOYD HARDER

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