A Medical Device Daily

AGA Medical (Plymouth, Minnesota), a manufacturer of products designed for the minimally invasive treatment of congenital heart defects, has agreed to pay a $2 million criminal penalty in connection with corrupt payments to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA), Acting Assistant Attorney General Matthew Friedrich reported.

The Department of Justice said it will delay prosecuting AGA for three years. If AGA Medical abides by terms of an agreement during that time, the DOJ will dismiss the case.

The two-count criminal information charges AGA with one count of conspiring to make bribe payments to Chinese officials and one count of violating the FCPA in connection with the authorization of specific corrupt payments to officials in China.

According to the criminal information, between 1997 and 2005, AGA, a high-ranking officer of AGA and other AGA employees agreed to make corrupt payments to doctors in China who were employed by government-owned hospitals and caused those payments to be made through AGA's local Chinese distributor. In exchange for these payments, the Chinese doctors directed the government-owned hospitals to purchase AGA's products rather than those of the company's competitors.

The criminal information also alleges that from 2000 through 2002, AGA sought patents on several AGA products from the People's Republic of China State Intellectual Property Office. As a part of this effort, AGA and a high-ranking officer of AGA agreed to make payments through their local Chinese distributor to Chinese government officials employed by the State Intellectual Property Office in order to have the patents approved.

Company attorney Ron Lund told the Associated Press that AGA voluntarily disclosed the problem to the government after an internal investigation and has put in procedures to prevent future problems. Lund said the company has been working with the Justice Department to dispose of the case and is "very happy to have it behind us." Lund said AGA also stopped doing business with its distributor in China who was involved in the allegations.