Three Philips employees including the former director of Philips Poland are appearing in court next month. They are accused of bribing Polish hospital managers to buy all their medical equipment from the Dutch multinational.

Revelations in the Dutch Financieele Dagblad newspaper and on NOS public TV indicate that Philips has been bribing hospital managers in Poland for years. The present affair surfaced after an intermediary involved in the scam went to the Polish judicial authorities.

False impression
Whistleblower Marian Kulig was the owner of a small business which traded in medical equipment. He competed on paper with Philips for hospital orders to give the impression there was fair competition.

In reality, hospital managers who needed new equipment were being bribed by Philips. In return for the money, they adjusted their technical requirements so that these could only be met by Philips products. Even if Mr Kulig got the order, he would end up delivering equipment made by Philips. He also says he acted as intermediary, handing over cases of money to hospital managers.

He maintains that all the profits made by Philips Poland between 2000 and 2007 were the result of bribery.

He reported the fraud to the authorities after having a business disagreement with Philips. Under Polish law, he is not liable to prosecution because he acted as a whistleblower.

The Philips office in Hamburg in Germany is also reported to have been involved in the affair. Hamburg originally supplied all the equipment for Eastern Europe and Mr Kulig alleges it had a special bribery fund.

He can’t be sure whether Philips head office in the Netherlands knew what was going on, but he claims those at the top of Philips Poland must have been aware of the situation. Although, at meetings of regional directors attended by Mr Kulig, people never talked about bribes, they did use the term ‘flowers’.

The board of Philips in the Netherlands has launched an investigation into the bribery. The company is refusing to comment before the results are known.

US stock market
The scandal could have far-reaching financial consequences for the Dutch multinational. European companies registered on the United States stock market are liable to prosecution in the US, and the Foreign Corrupt Practices Act covers fraud committed both inside and outside the US.

Radio Netherlands Worldwide             17/05/2011