Police in Brazil have arrested General Electric Latin American CEO Daurio Speranzini Jr. Wednesday in a probe of suspected fraud and corruption by international companies in the health system of the state of Rio de Janeiro.
Speranzini was at one time the head of Philips Medical Systems for Brazil and was amongst 22 people police arrested including an executive with the Dutch company Frederik Knudsen.
Police made 44 raids, including at the Phillips and Johnson & Johnson Brazilian headquarters, but not GE offices, said the prosecutor’s office in Rio.
The probe, with a code name of Operation Resonance, was aimed at dismantling a suppliers’ cartel that was accused of carrying out fraud in order to secure contracts with the public health service in Rio from 1996 to 2017.
Thirty-three or more companies made up the cartel that was led by Oscar Iskin, distributors of medical instruments, and was referred to as the “international auctions club.”
A public prosecutor said that top executives with multinational medical equipment makers arranged amongst themselves who would be winning each contract through paying a commission of 13% to Iskin on those contracts.
Executives at Iskin would then be the link between authorities in public health and the companies that made up the cartel so contracts could be steered from competitors who did not take part in the cartel.
GE released a statement saying that accusations that were made against Speranzini were from a time in which he was the head of another company.
Speranzini became the Latin America CEO at GE in January, after previously holding the positions of the president of regional health department between 2014 and 2017.
Speranzini was the head of Philips Medical Systems in Brazil between 2004 and 2010. Philips announced that it was cooperating with Brazilian authorities to bring to light accusations that are a number of years old.
Brazil has had several corruption scandals plague the government the last few years involving the meat industry and also the public oil giant Petrobas.