Brazil police arrest GE Latin America head, 21 others, in probe

RIO DE JANEIRO (Reuters) - Brazilian police arrested a senior General Electric Co GE.N executive on Wednesday, as part of a sprawling investigation into fraud in medical equipment tenders overseen by health authorities in the state of Rio de Janeiro, police and prosecutors said.

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In addition to the arrest of GE’s chief executive for Latin America, Daurio Speranzini Jr., prosecutors said federal police were carrying out 21 arrest warrants as part of the investigation, which concerns a trauma institute known as Into and involves some 37 companies.

The investigation, code-named “Operation Resonance,” is the latest fraud and corruption probe in Brazil, where the arrest of high-ranking political and business figures has become a matter of routine, particularly in Rio de Janeiro.

Speranzini was previously the head of Philips Medical Systems in Brazil. Frederik Knudsen, who prosecutors said was a sales supervisor at Philips in Brazil during the period under investigation, was also among the people police were seeking to arrest.

In a document sent to a federal court and seen by Reuters, prosecutors said there “exists robust proof of participation” by Speranzini and Knudsen in corruption, bid rigging, and criminal conspiracy.

In addition to the arrests, police said they executed 44 search warrants on Wednesday, which included buildings occupied by Philips and U.S. multinational Johnson & Johnson JNJ.N.

A federal court also ordered some 1.2 billion reais ($307 million) in assets to be frozen.

It was not immediately possible to contact Speranzini or Knudsen.

GE said in a statement that with regard to the police operation “that resulted in the temporary imprisonment of Daurio Speranzini Jr., we clarify that the allegations refer to a period in which the executive was leading a different company.”

It added, “GE emphasizes that it is not the target of the investigation. The company believes that the facts will be clarified by the courts and the company is at the disposition of the authorities to cooperate.”

Koninklijke Philips NV PHG.ASPHG.AS, as Philips is formally known, said in a statement the company's current leaders were not involved in the police operation and that the firm was cooperating with authorities.

Philips “still doesn’t have access to the official accusations; however, the company is cooperating with the authorities to offer all clarifications regarding the allegations, that go back many years,” the company said, adding that the “current head executives of Philips are not part of the federal police operation.”

Johnson & Johnson said it “vigorously followed” Brazilian law and was “cooperating fully” with the investigation.

Reporting by Pedro Fonseca; Writing and additional reporting by Gram Slattery; Editing by Chizu Nomiyama and Frances Kerry