Tuesday, February 13, 2007


Yesterday, Johnson & Johnson issued a statement that it had voluntarily disclosed that subsidiaries made improper payments to two small-market countries in connection with the sale of medical devices. It also announced the retirement of Michael Dormer, its worldwide chairman of Medical Devices & Diagnostics. In his letter to the company Dormer cited the internal review of this issue and his ultimate responsibility because of his position. Johnson & Johnson did not name the two countries in its statement. The full statement, which can be found at http://www.jnj.com/news/jnj_news/20070212_192452.htm, reads (the statement is in boldface):

Johnson & Johnson Statement on Voluntary Disclosure

New Brunswick, N.J. (February 12, 2007) - Johnson & Johnson today voluntarily disclosed to the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) that subsidiaries outside the United States are believed to have made improper payments in connection with the sale of medical devices in two small-market countries. The actions were contrary to the Company's policies, and the payments may fall within the jurisdiction of the Foreign Corrupt Practices Act. The Company will provide additional information to DOJ and SEC, and will cooperate with the agencies' reviews of these matters.

Effective today, Michael J. Dormer, Worldwide Chairman, Medical Devices & Diagnostics, has retired from the Corporation. In a letter to Johnson & Johnson, Mr. Dormer cited the internal review of these matters and noted he had "ultimate responsibility by virtue of my position" for those subsidiaries that were the subject of the disclosure.

Effective immediately, all worldwide businesses within the Medical Devices & Diagnostics segment will report to Nicholas J. Valeriani, Worldwide Chairman, Medical Devices & Diagnostics, a Company executive with nearly 30 years experience. Mr. Valeriani will now have responsibility for businesses previously under the management oversight of Mr. Dormer, in addition to those for which he is already responsible.

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In light of this voluntary disclosure and Johnson & Johnson’s storied history of ethical behavior in the marketplace based on its Credo, I thought it appropriate to link to The Right Thing column I wrote that originally ran in July 2001, after Johnson & Johnson faced another crisis with one of its subsidiaries. You can find that column at THE RIGHT THING; A Company Credo, as Applied or Not. (There should be no charge to view it online via this link.)

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